Question

Statement I:
Receipts & Payment A / c starts with the opening balance of cash in hand and at bank.
Statement II :
Income & Expenditure A / c have no opening balance.
Select the correct answer from the options given below.

• A. Statement I is correct while statement II is incorrect.
• B. Both Statement I and II are incorrect.
• C. Statement II is correct while statement I is incorrect.
• D. Both Statement I and II are correct.

Answer 1

Answer: (D)

Both Statement I and II are correct.

• Receipts and Payment A/c. is an account which record the payments done and receipts received in cash. It is similar to the cash account maintained in a business. The entries found in this account are opening balance of cash, to this the cash receipts are added and the cash payments are deducted and the remaining figure is the closing cash balance.
• Income and Expenditure A/c. is nothing but another name for a Profit & Loss account. Income and Expenditure name is mostly used by non-business entities, but still all the principles are same as a Profit & Loss account. This account only records the expenses and income for a particular financial year and hence doesnt have any opening balance of any sorts.