Commercial Applications
The closing balance of this Account shows surplus or deficit for the year.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
Answer
Income and Expenditure Account
Reason — The closing balance of the Income and Expenditure Account shows surplus or deficit for the year. If the credit side (income) exceeds the debit side (expenditure), there is a surplus (excess of income over expenditure). If the debit side exceeds the credit side, there is a deficit (excess of expenditure over income). The surplus is added to the Capital Fund, while the deficit is deducted from it in the Balance Sheet.
Related Questions
All cash payments are recorded on the …………… side of the receipt and payment accounts.
- Credit
- Debit
- Both (A) and (B)
- None of these
The primary objective of preparing this Account is to find out the cash position, opening and closing balances of cash in hand and at bank.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
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