Following are the main Differences Between Capital Profits And Revenue Profits with Examples.
Profit Arised from Non-recurring transactions is called capital profit. capital profit should be transferred to Capital Reserve account. Which appears on the liabilities side of the balance sheet.
Capital profit includes:
- profit earned on the sale of fixed assets(excess of selling price over the cost price).
- The premium on issue of securities.
- Profit from the absorption of another firm.
- Discount on redemption of securities.
- Profits prior to incorporation.
- Profit remaining on Re-issue of forfeited shares.
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You are here Differences Between Capital Profits And Revenue Profits with Examples.
profit earned in the ordinary course of business is Called revenue Profit.
Profit Revenue profit includes:
- Discount received.
- Profit from the sale of goods.
- Commission received.
- Interest received.
- Profit on the sale of fixed assets (excess of cost overwritten down value).
- Profit on sublet.
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