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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
Gunjan Mahajan posted an Question
September 09, 2021 • 22:25 pm
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30 points
30 points
- UGC NET
- Commerce
Deferred revenue expenditures
please explain me this and revenue receipt and capital receipt in short
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Rucha rajesh shingvekar Best Answer
Deferred revenue, also known as unearned revenue, refers to advance payments a company receives for products or services that are to be delivered or performed in the future. The company that receives the prepayment records the amount as deferred revenue, a liability, on its balance sheet. For example, revenue used for advertisement is deferred revenue expenditure because it will keep showing its benefits over the period of two to three years. Capital Receipts appears on the liabilities side of the Balance Sheet whereas Revenue Receipts appears on the credit side of the Profit and Loss Account as income for the financial year. The capital receipt is received in exchange for the source of income. Unlike revenue received which is a substitution of income.