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
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.
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