Commercial Applications
Which of the following is/are correct statement(s)?
Statement 1: Income and Expenditure Account includes both capital and revenue items.
Statement 2: Receipts and Payments Account is a summary of cash transactions over a specific period.
- Only Statement 1 is correct
- Only Statement 2 is correct
- Both Statements 1 and 2 are correct
- Both Statements 1 and 2 are incorrect
Accounting
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Answer
Only Statement 2 is correct
Reason — Statement 1 is INCORRECT because Income and Expenditure Account includes only revenue items relating to the current year, not capital items. Statement 2 is CORRECT because Receipts and Payments Account is indeed a summary of all cash transactions (both receipts and payments) of an accounting year, prepared from the Cash Receipts Journal and Cash Payments Journal.
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Related Questions
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
If the total of …………… side is greater than the total of …………… side, it is called 'surplus' or 'excess of income over expenditure'.
- Debit, credit
- Credit, debit
- Credit, credit
- Debit, debit
Which of the following is/are correct statement(s)?
Statement 1: Income and Expenditure Account includes both capital and revenue items.
Statement 2: Receipts and Payments Account is a summary of cash transactions over a specific period.
- Only Statement 1 is correct
- Only Statement 2 is correct
- Both Statements 1 and 2 are correct
- Both Statements 1 and 2 are incorrect