In this clip, we will learn the meaning of Receipts and
Expenditure
Let's see the meaning of Receipts and Expenditure
Receipts, it is the amount which is received or receivable
for selling goods, services or assets.
These receipts are further classified as follows
The meaning of Receipts is, if you relate it to English,
then you will think that the money that has been received
is our receipts
But your accounts say that the money that has come is
received, but the money that is receivable is also your
receipts
Receipts basically means that what is coming and what is
going to come and what has come
For example, you sold cash for Rs.
10,000 and Rs.
10,000 came to you, that Rs.
10,000 is your receipts
For example, you sold a loan for Rs.
10,000 and the other party is saying that I will give you
money very soon, so that money has not come, but it is
receivable, it is coming
So what is that, that is also your receipts, that will also
become receipts
What happens to us is that we have to show the receipts in
our trading account, on the credit side
And the trading account is made on the basis of accrual
Accrual basis means that the loan transaction will also be
considered and the cash transaction will also be considered
We will also consider the loan transactions and if we have
sold a loan, then we will also consider it as a receipt
We do not do business thinking that if it has not come,
then it will not come
It has not come, but we have a written document, we have
taken a bill receivable from the debtor, we have a cheque,
so the money will come
It has not come, but it will come, that is also a receipt
We do accounting on the basis of accrual
Now we have two types of receipts
Revenue receipt and capital receipt
In simple words, the money that comes regularly, like
sales, like debtors, like we have invested somewhere
Interest keeps coming from there, like we have bought
shares of a company, dividend keeps coming regularly
Like we have bought a company's diventure, interest keeps
coming regularly
So that thing will become a revenue receipt for us, regular
And capital receipt, which we earn occasionally, which
money comes to us occasionally
Like we pick up some furniture from here and sell it, we do
not sell it every day, sometimes we sell it
The receipt that comes from there will be a capital receipt
In this way, for example, we did something that we do not
do regularly in business
We played a lottery and won two lakh rupees in the lottery
So that thing will become a capital receipt, not regular
income, it does not come regularly from there
But sometimes from there, sometimes it is received from
there
Revenue receipt, the amount that has been received or is
receivable by the business in its normal course
Either from the sale of goods or by providing services
It will also include the amount that is received from the
investment of business sources, interest from investment
Such amounts from the normal course of business are
recorded in the profit and loss account and income and
expenditure account
In case of NPO's
What is he saying?
He is saying that our revenue receipts go to the side of
our income in the profit and loss account
Because that is our income regularly, from that we will see
by minusing the expenses
Whether our profit is coming or loss is coming
And if you are an NPO, if you are a charity organization
The charity organization does not make P&L account
So where will this revenue receipt go for them?
Income and expenditure account
Charity organizations, NPO's make another account instead
of P&L account
Whose name is income and expenditure account
So they put it in the income and expenditure account
Let's read the capital receipt
The amount received or receivable against the transactions
which are not revenue in nature like sale of an asset,
investment, etc.
Such amounts are shown in the balance sheet of the business
entity
Okay, I have shown you
Capital receipt means the income which is not of regular
revenue in nature
And it is written here
We show this in the balance sheet and capitalize it
We add capital receipts in the balance sheet
It does not go in P&L as income
Why? Because the profit which should reflect in P&L should
be the actual profit
It should be the true and fair profit
You have earned Rs.
2,00,000 lottery this year
And you write it in your net profit
Show Rs.
2,00,000 in P&L account
And your profit will increase and people will think that
you are earning a lot
They will invest in you
Next year you will not have that much profit
Because next year you will not play the lottery
Next year you may play and win
There are rare chances that next year the profit will be
less
Then investors will say that we had invested thinking that
they have a lot of profit
This time they have not earned anything
There should not be such fights
One thing should be clear from the beginning
That's why regular incomes come in P&L account
So that the profit looks pure and rich
Which is going on regularly
We add capital receipts in the balance sheet
And capitalize it
So receipts
There are two parts
Revenue receipt and capital receipt
Thereafter, expenditure
Receipt is just opposite to expenditure
It is amount spent and liability incurred
Amount spent and liability incurred
Means either you have made a payment
You can understand from expenditure that it means
expenditure
So either you have made a payment or you have bought a loan
It will be called expenditure
Because accounting is based on accrual
And they say that if there is a loan or a debt
We will consider all kinds of transactions
So expenditure does not mean only this
For example, I bought stationery with me
And I bought it and made a payment of Rs.
So you will say that you have made a payment of Rs.
You spent Rs.
This has become your expenditure
For example, I have borrowed this writing pad
I have borrowed this writing pad for Rs.
So this will also become my expenditure
I have not paid today
But if I have to pay tomorrow
Even then it will become my expenditure
Like it was about receipts
It has not come, but it will come tomorrow
Even then it will be called a receipt
The money has not gone, but the liability has come
I will have to make a payment tomorrow, the money will go
Even then it will become your expenditure
Why will we spend?
Even if we make a payment
Even if we make a loan or expenditure
But why will we do expenditure?
For acquiring assets
To buy assets
To buy goods and services
For example, I bought machinery
I paid money, it is expenditure
I bought a machine loan, it is also expenditure
For example, I bought goods
Goods means the thing from which you are going to sell
So that is also an asset
Whether it is a loan or an expenditure
And services
Like There is a cleaning staff in the office
Cleaning people come
What is the payment you do to them?
It is a service expenditure for you
In return, you have taken the service
Expenditure is also there
If you are giving them a salary in two months
You are borrowing their salary for a month
So that one month's loan and salary will also become
expenditure
Okay sir
Like there are two types of receipts
Revenue receipts and capital receipts
Similarly, there are two types of expenditure
Revenue expenditure
And capital expenditure
Deferred revenue expenditure
Ignore it
Because deferred revenue expenditure used to happen earlier
We don't have it now
This thing is closed
Revenue expenditure, capital expenditure
Sir, what was the meaning of revenue receipt?
The money that came regularly
So what will be the meaning of revenue expenditure?
The people who are spending on our regular basis
Wi-Fi expenses
Rent expenses
Salary expenses
Cleaning expenses
These are our regular expenses
That is revenue expenditure
And the expenses we do in some gap
Once in a gap of many years
That is capital expenditure
This is not very simple
Let's read
Revenue expenditure
It is that expenditure, the benefit of which is consumed
Or exhausted within the accounting period
Spending regularly
These are the amounts spent for purposes
Which are directly related to the business of the entity
Like goods sold, rent, electricity, etc.
Which is directly related to the business
Means You have to do it regularly
Without which the business cannot run
Rent, electricity, cleaning, without which the business
will not run
They are shown in trading or profit and loss account
In case of profit making enterprises
And in income and expenditure account
In case of an NPO
If profit making business enterprise is there
Then where will we show revenue expenditure?
We will show the debit side
In the trading P&L account
They do not make trading P&L
What do they make? Income expenditure
We will show the income expenditure side
Okay Capital expenditure
It is the amount incurred to acquire tangible or intangible
assets
Or the amount spent on improving the existing asset
Which increases the earning capacity of the business
These are shown in the balance sheet of an entity
The same thing
Which you do sometimes
Like buying machinery
Once in a year
I bought this camera 2-3 years ago
When will you buy another one?
When it will be completely ruined
The same furniture
The same building
And Where do we show these capital expenditures?
In the balance sheet of an asset
Capital receipts in the balance sheet
Capital expenditure in the balance sheet
Okay Debit revenue expenditure
We have to see
Okay