Commercial Applications
It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
Accounting
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Answer
Income and Expenditure Account
Reason — The Income and Expenditure Account serves as the basis for preparing the Balance Sheet of a non-trading organisation. The surplus or deficit ascertained from the Income and Expenditure Account is transferred to the Capital Fund in the Balance Sheet — surplus is added to the Capital Fund while deficit is deducted from it.
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Related Questions
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
This account is equivalent to the Profit and Loss Account of a business concern.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
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.