PRC-1 · Chapter 1 · Question 31 of 100
A business receives Rs. 1 million as a bank loan and Rs. 500,000 from the cash sale of inventory. How are these items categorized?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The bank loan is a capital receipt; the sale of inventory is a revenue receipt.
Explanation
Routine operating income like the sale of inventory constitutes a revenue receipt, whereas financing activities like acquiring a bank loan represent capital receipts.
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