PRC-1 · Chapter 1 · Question 22 of 100
A commercial entity received Rs. 2 million from a customer for the sale of a commercial vehicle, and on the same day received a bank loan of Rs. 5 million to expand its showroom. How should these two financial receipts be classified?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The sale is a revenue receipt; the loan is a capital receipt.
Explanation
Income generated from ordinary trading activities (like selling goods) is a revenue receipt, whereas funds acquired from non-routine transactions like obtaining a bank loan are capital receipts.
More Accounting Basics MCQs
- Q24'Luminous Electronics' consistently uses the exact same inventory valuation method (such as FIFO) every single year. Which qualitative…
- Q25While bookkeeping primarily focuses on the routine task of recording daily financial transactions, 'Accounting' is a broader concept that…
- Q26'Sterling Services' completed a consulting project for a client in December but did not receive the cash payment until February of the…
- Q27What is the immediate effect on the accounting equation when a business uses its cash at the bank to fully settle an outstanding balance…
- Q28Which of the following internal stakeholders relies on financial statements primarily to assess whether the business can continue to…