DK Goel Class 11 Accountancy Solutions: Chapter 20 Overview

Commerce

DK Goel Class 11 Accountancy Solutions: Chapter 20 Overview

Download Important Class 11 DK Goel Solutions for Chapter 20 - Capital and Revenue Free PDF

The DK Goel Accountancy Solutions for Class 11 Chapter 20 - Capital and Revenue have been provided on the website of Vedantu for the students to deeply understand the concept well and score better marks. The DK Goel Accountancy Solutions are a great resource to refer to for the Commerce students. These solved exercise questions of Accountancy Class 11 Chapters are a great help for the students in their exam preparation and revision. These solutions have chapter wise details that are provided to you for free in PDF format.

Download DK Goel accountancy solutions for Class 11 Chapter 20 - Capital and Revenue from Vedantu, which are curated by expert teachers to prepare well for your exams.

Components of the Chapter 20 - Capital and Revenue

The terms 'capital' and' revenue' are two of the most basic ideas in the world of business. These ideas are the foundation of a country's economy. It is critical to draw specific conclusions about income collections and related expenditures based on our country's financial situation, as this impacts the country's financial health. It is important to grasp the notions of 'capital' and' revenue' before delving into such an examination.

The liquid assets (usually in the form of cash) obtained by a corporation to be used for its expenses are referred to as capital. This is a broad definition of capital; however, in financial economics, the capital possessed by a firm is also referred to as its capital assets. The income created by a company/business in the form of discounts or deductions for the products returned, on the other hand, is referred to as revenue. The total income of a firm, or the gross income excluding business operations costs, is referred to as revenue. The net income of a company is determined by subtracting costs from revenue.

What is a Revenue Account?

A revenue account is defined as one that has a credit balance. It includes all of the government's revenue receipts, often known as current receipts. These receipts include tax revenues and other government revenues.

The cash raised by governments via the imposition of direct and indirect taxes and charges are known as tax revenues. For instance, income tax, corporate tax, and other direct taxes are all examples of direct taxes. Indirect taxes include excise duties, customs duties, and service tax. Interest, dividends, profits from public sector units, fees, fines, and other forms of investment income are among the other sources of revenue.

Revenue expenditures are expenses that are not used to develop assets or pay off creditors. These mostly consist of the government's current expenses. Revenue expenses include things like paying salaries and providing grants. It can be further separated into planned and unplanned spending. However, in the current budget, this classification was not used.

What is a Capital Account?

A capital account is one that tracks capital inflows and outflows. It essentially encompasses the government's assets and liabilities. The loans or capital raised by governments through various sources are referred to as funds receipts.

They can also borrow money from the general public through market loans. Treasury Bills, often known as T-Bills, might be used to borrow from banks or other sources. Loans are also funded by external sources such as foreign governments or international organizations.

FAQs on DK Goel Class 11 Accountancy Solutions: Chapter 20 Overview

1. What does the term ‘capital expense' mean?

A capital expense also known as a capital expenditure, is the cost incurred by the government or a corporate entity in purchasing assets. Fixed assets, such as machinery, equipment, or real estate, are purchased with capital funds.

Purchasing and selling assets is a necessary component of running a company. It is beneficial in extending a business's operations in order to secure future capital and financial assets. For a government, capital expenditure entails improving assets while lowering obligations. It can do so in the form of loan repayment, where the debt represents a liability, and the government reduces its liability by repaying the loan.

2. Is revenue expense an important concept in the Class 11 Accountancy Chapter 20?

Revenue expense, often known as revenue expenditure, is a concept that goes hand in hand with capital expenditure. Revenue expenditures are costs incurred by a business that are incurred as current expenses, meaning they are not incurred to create assets or remove liabilities.

The government's income expenses include salaries and wages, grants, advertising, rent, and costs of sold items, among other things. While capital and revenue expense concepts appear to be comparable at first look, there is a substantial distinction between the two.

3. What are some instances of government capital expenditures?

The price of constructing assets such as schools, colleges, bridges, roads, hospitals, railway lines, dams, and airports are included in the government's capital expenditure. Another kind of government capital spending is the reduction of its liabilities, such as the repayment of loans and the reduction of investments in public units or public sectors. The government's creation of fixed assets is always linked to capital expenditure. The government can control such spending by acquiring new assets, selling them, or lowering the obligations or debt it has amassed. The formation of fixed assets as part of capital expenditure also results in a depreciation of their value.

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The importance of accountancy in terms of grades is well known among commerce students. The majority of students pursue higher education in this field. As a result, you must not overlook this topic. When it comes to accounting, though, getting a perfect score is not impossible. To avoid making mistakes, you'll need to do a lot of revision and practise.

NCERT Accountancy book Class 11 might be quite useful in this aspect. This book covers everything from basic accounting concepts to more sophisticated ones. This book teaches students about basic topics such as bank transactions, financial statements, depreciation, and bill of exchange, among others. And how can we forget the additional study materials students can access on the website of Vedantu. They can download it and study according to their time and place. Furthermore, you can avail all the well-researched and good quality chapters, sample papers, syllabus on various topics from the website of Vedantu and its mobile application available on the play store.

5. What type of Revenue Expenditures are treated as Capital Expenditure?

The following is a list of significant revenue expenditures which in some cases, they are classified as capital expenditures.

If raw materials and consumables are employed in the creation of any fixed assets.
If you need to transport Fixed Assets, you'll have to pay for transportation and freight.
Repairs and renewals are only charged if they are necessary to extend the asset's life or improve its efficiency.
Expenses incurred during the creation of a business should be recognised as capital expenditure.
If the building work is paid for before the start of production or business, interest on capital is charged.
Development Expenditure In some industries, such as a Tea or Rubber plantation, a long-time of development and a large amount of investment are required before production can begin. Typically, these expenses should be classified as capital expenditures.
Wages if they are used to build up assets or to erect and install plants and machinery.