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Capital and revenue profit & Capital and revenue loss
Capital profit and Revenue profit
In order to find out the correct profit and the true financial position, there must be a clear distinction between capital profit and revenue profit.
Capital profits
Capital profit is the profit which arises not from the normal course of the business. Profit on sale of fixed asset is an example for capital profit.
Revenue profits
Revenue profit is the profit which arises from the normal course of the business. i.e, Net Profit – the excess of revenue receipts over revenue expenditures.
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Capital loss and Revenue loss
In order to ascertain the loss incurred by a firm it is important to distinguish between capital losses and revenue losses.
Capital Losses
Capital losses are the losses which arise not from the normal course of business. Loss on sale of fixed asset is an example for capital loss.
Revenue Losses
Revenue losses are the losses that arise from the normal course of the business. In other words, ‘net loss’ – i.e., excess of revenue expenditures over revenue receipts.
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