Commercial Applications
This account is equivalent to the Profit and Loss Account of a business concern.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
Accounting
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Answer
Income and Expenditure Account
Reason — Income and Expenditure Account is prepared by non-trading organisations and is equivalent to the Profit and Loss Account of a business concern. Both are nominal accounts; both contain only revenue items relating to the current year; both are prepared on accrual basis; and the closing balance of both shows the result of operations (surplus/deficit for non-trading and net profit/loss for trading concerns).
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Related Questions
It alerts the management of a non-trading organisation about decline in cash receipts and increase in cash payments.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
Receipt and payment account has the following limitation(s).
- It does not reveal surplus or deficit for the year
- It does not indicate financial position of the organisation
- It does not disclose details of receipts and payment
- All of these
It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
The main use(s) of a Balance Sheet for a non-trading organisation is/are
- Balance Sheet shows the assets owned by a non-trading organisation.
- It reveals the liabilities of the organisation.
- It shows the financial position of the organisation.
- All of these