Every business entity is required to maintain the accounts in a proper way as per rules applicable. Wrong classification of the expenditure and revenue may have a great impact on the financial position and the financial performance/results of the business entity. Let us learn in details how to distinguish between capital & revenue transactions. To make a correct assessment of the income of a business, it is necessary to understand the nature of a transaction. A business has to make a distinction between revenue and capital expenditure and income. This is done for the purpose of placing them in profit and loss A/c and in balance sheet.
Test Your Skills
Test Your Skills Now!
This is only a practice test, it is designed to help you revise your concepts
The test contains questions, only 1 option is correct for each question
This is a timed test.
After you have finished the test, press on the 'Finish Test' button to know your score and get the correct answers