Which item is normally treated as a capital receipt rather than a revenue receipt?
Correct answer: C. Proceeds from selling a business vehicle
- A. Cash received from selling goods
- B. Cash received from providing services
- C. Proceeds from selling a business vehicle
- D. Commission received from customers
Explanation
Proceeds from selling a business vehicle arise from disposing of a long-term asset and are therefore capital in nature. Sales, service income and commission are generated from normal operating activities.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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