Capital Receipt - QS Study
QS Study

Capital receipt is one which is invested in the business for a long period. It includes long term loans obtained from others and any amount realized on sale of fixed assets. It is usually non-recurring in nature. Capital receipts are a non-recurring incoming cash flow into your business, which leads to the creation of a liability (a debt to be paid in the future) and a decrease in company assets (resources that lead to capital gain). This refers to those receipts which either create a liability or cause a reduction in the assets of the government. They are non-recurring and non-routine in nature.

Capital payments consist of capital expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc.

Characteristics

  1. Amount is not received in the normal course of business.
  2. It is non-recurring in nature.

Examples

  1. Capital introduced by the owner
  2. Borrowed loans
  3. Sale of fixed asset.