Which of the following is an example of capital income?

Study for the BTEC Business – Personal Finance Exam. Test your knowledge with interactive quizzes and insightful explanations. Prepare effectively and excel in your exam!

The correct answer is based on the distinction between different types of income in business. Capital income refers specifically to funds that are used to acquire physical assets or investments, such as equipment, machinery, or property. This type of income is typically involved in the growth or expansion of a business.

Funds used to purchase equipment represent a form of capital investment, which is crucial for establishing or enhancing a business's operational capabilities. This investment can lead to increased production efficiency or enable the company to offer new products or services, thereby potentially generating further profits in the future.

In contrast, profits earned from selling products, income from services rendered, and money received from customers are all considered forms of revenue derived from the core activities of the business rather than capital income. These revenues are generated from the business's day-to-day operations and directly reflect the sales performance of the company rather than its capital investment strategy.

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