Capital income occurs when you sell an asset that was treated as capital expenditure. Which is an example?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Multiple Choice

Capital income occurs when you sell an asset that was treated as capital expenditure. Which is an example?

Capital income comes from disposing of a capital asset that was recorded as a capital expenditure. Selling old machinery is exactly that: you’re selling a fixed asset you previously bought, so the cash received is capital income. The other options come from different kinds of activity: selling goods to customers is revenue from regular trading, not from asset disposal; receiving a loan is financing activity, not income; and earning interest is income from financial investments, not from selling a capital asset.

Capital income occurs when you sell an asset that was treated as capital expenditure. Which is an example?

Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Capital income occurs when you sell an asset that was treated as capital expenditure. Which is an example?

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