Accounting for IGCSE & O level - Accounting Procedures (Section 17 - No. 39)
What is the purpose of distinguishing between capital and revenue receipts in accounting?
To properly classify the amounts as debit or credit.
To accurately assess the financial position of the business.
To avoid miscalculations when posting to ledgers.
To simplify tax reporting.
Explanation
Distinguishing between capital and revenue receipts is critical for financial statement accuracy.
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