[Solved] Capital profit imply profit earned

Capital profit imply profit earned

a) Through business transaction

b) From capital

c) From sale of fixed assets

d) From sale of current assets

Answer: (c) Capital profit imply profit earned from the sale of fixed assets. Profits generated from the normal trading activity are considered revenue profits. The selling of fixed assets is abnormal activity, not a business activity. hence profit arising out of the sale of assets is a capital profit, This has to be recorded in the profit & loss account as an exceptional item.

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