Purchase of a fixed asset by a non-profit organization will be shown in _____________.

Income and Expenditure account

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Receipts and Payments Account

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Both (A) and (B)

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Neither (A) nor (B)

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Solution

The correct option is B Receipts and Payments Account
Receipt and payment account records all cash receipts and cash payments during the year whether related to current year, previous year or future year. It records both capital and revenue nature receipts and payments. Purchase of fixed assets includes cash. It is recorded in Receipts and Payments Account. It is not a revenue nature item. It is not recorded in Income and Expenditure Account.

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