Commercial Applications
Assertion (A): The Receipts and Payments Account reflects non-cash transactions such as depreciation.
Reason (R): Depreciation is a non-cash expense that affects the organization's financial position.
- A is true but R is false
- A is false but R is true
- Both A and R are true and R explains A.
- Both A and R are true but R does not explain A.
Accounting
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Answer
A is false but R is true
Reason — The Assertion is FALSE because the Receipts and Payments Account contains only cash items and does NOT include non-cash items like depreciation, accrued income, income received in advance, outstanding or prepaid expenses. The Reason is TRUE because depreciation is indeed a non-cash expense that affects financial position (it appears in the Income and Expenditure Account and is deducted from the value of fixed assets in the Balance Sheet).
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Related Questions
The Receipts and Payments Account includes both cash and non-cash transactions such as depreciation.
- True
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It is a summary of all incomes and expenses of the current accounting year. It is prepared to know the surplus or deficit during the accounting year.
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It is a statement of assets and liabilities. It is prepared to judge the financial position on a particular date.
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A charitable organization has recently sold old office furniture and purchased new sports equipment. In the Receipts and Payments Account, where would these transactions appear, and what impact would they have on the final balance?
- Sale of furniture appears on the debit side; purchase of sports equipment appears on the credit side, reducing the final balance.
- Sale of furniture appears on the credit side; purchase of sports equipment appears on the debit side, increasing the final balance.
- Both transactions appear on the debit side, reducing the final balance.
- Both transactions appear on the credit side, increasing the final balance.