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Question
Which of the following statement is correct and which is incorrect ?
(I) In Receipt & Payment A/c all receipts and payments are shown irrespective of the year to which they pertain.
(II) The difference at Dr. side of Receipt & Payment A/c account is known as surplus or deficit and deducted from capital fund.
(III) Income & Expenditure A/c is always accompanied by balance sheet.
(IV) Going concern assumption is not relevant for accounting of non-profit organization.
Select the correct answer from the options given below.
Which of the following statement is correct and which is incorrect ?
(I) In Receipt & Payment A/c all receipts and payments are shown irrespective of the year to which they pertain.
(II) The difference at Dr. side of Receipt & Payment A/c account is known as surplus or deficit and deducted from capital fund.
(III) Income & Expenditure A/c is always accompanied by balance sheet.
(IV) Going concern assumption is not relevant for accounting of non-profit organization.
Select the correct answer from the options given below.
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Solution
The correct option is B (I) - correct, (II) - incorrect (IIl) - correct, (IV) - incorrect
(I) Correct- In Receipts and payments account only cash transactions are taken in account whether or not they are related to this year.(ii) Incorrect- The difference at the debit side of receipts and payments account is balance of cash at the end of the year, Receipts and payments account is just like a cash account. Hence, after taking into account all the transactions what is left is balance of cash at the end of the year. (iii) Correct- Income and expenditure account is always accompanied by balance sheet because it contains the balance that occur in the year end. Income and expenditure doesn't account for advances and outstanding payments.(iv) Incorrect - Going concern means it is assumed that the business will go on forever. This accounting assumption is relevant for all companies without any exception.
(I) Correct- In Receipts and payments account only cash transactions are taken in account whether or not they are related to this year.
(ii) Incorrect- The difference at the debit side of receipts and payments account is balance of cash at the end of the year, Receipts and payments account is just like a cash account. Hence, after taking into account all the transactions what is left is balance of cash at the end of the year.
(iii) Correct- Income and expenditure account is always accompanied by balance sheet because it contains the balance that occur in the year end. Income and expenditure doesn't account for advances and outstanding payments.
(iv) Incorrect - Going concern means it is assumed that the business will go on forever. This accounting assumption is relevant for all companies without any exception.
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