Distinguish between the following: (i) capital receipts and revenue receipts, (ii) capital profits and revenue profits, and (iii) capital losses and revenue losses.
(i) Capital receipts and revenue receipts: Capital receipts refer to the inflow of funds that result in the creation or acquisition of an asset or reduction in liabilities, resulting in long-term benefits to the entity. These receipts are not recurring in nature and are generated by selling fixed assets, issuing long-term loans, or raising share …