Commercial Applications
The capital fund in the Balance Sheet increases with a surplus shown in the Income and Expenditure Account.
- True
- False
Answer
True
Reason — The closing balance of Income and Expenditure Account shows surplus or deficit for the year. The surplus (excess of income over expenditure) is added to the Capital Fund in the Balance Sheet, thereby increasing it. Conversely, a deficit is deducted from the Capital Fund.
Related Questions
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
Assertion (A): The Balance Sheet provides information about an organization's financial position at a specific point in time.
Reason (R): The Balance Sheet includes assets, liabilities, and equity, which reflect the organization's resources, obligations, and owner's interests.
- 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.
Regarding the components of an Income and Expenditure Account, which statement(s) is (are) accurate?
Statement 1: Income and Expenditure Account is prepared to ascertain the profit or loss of a non-profit organization.
Statement 2: Income and Expenditure Account includes both revenue and capital items.
Statement 3: Income and Expenditure Account is only applicable to businesses and corporations.
Statement 4: Income and Expenditure Account records only cash transactions.
- 1 & 2
- 3 & 4
- Only 1
- 2 & 4
It contains both capital and revenue items.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these