Commercial Applications
With reference to Receipts & Payments Account which feature(s) is/are correct?
Statement 1: It is a real account.
Statement 2: It reveals the surplus or deficit for the year.
Statement 3: It is a summary of cash receipts.
Statement 4: It contains non-cash items.
- 1 and 3
- 2 and 4
- Only 3
- Only 4
Accounting
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Answer
1 and 3
Reason — Statement 1 is CORRECT — R&P Account is a real account that follows the rule "debit what comes in, credit what goes out." Statement 3 is CORRECT — it is a summary of cash receipts (and payments). Statement 2 is INCORRECT — R&P Account does NOT reveal surplus/deficit; that is the function of Income and Expenditure Account. Statement 4 is INCORRECT — R&P contains only cash items, no non-cash items like depreciation.
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