TRUE OR FALSE
Q.1. Receipts and Payments Account is a summary of all capital receipts and payments.
Ans. False : The Receipts and Payments Account is a summary of all cash and bank receipts and payments whether capital or revenue in nature.
Q.2. The receipts and payments account records receipts and payments of revenue nature only.
Ans. False: The Receipts and Payments Account records the receipts and payments of both capital as well as revenue nature.
Q.3. If there appears a sports fund, the expenses incurred on sports activities will be taken into income and expenditure account.
Ans. False: If there exists specific sports find, the expenditure incurred in carrying out the purpose of the fund incurred on sports activities, will be deducted from the fund only.
Q.4. Receipts and Payments Account highlights total income and expenditure account.
Ans. False: Receipts and Payments Account is a classified summary of cash receipts and payments for an accounting period together with the cash and bank balances at the beginning and close of the accounting period.
Q.5. Scholarship granted to students out of funds provided by Government will be debited to Income and Expenditure Account,
Ans. False : Scholarships granted to students should be shown as deduction from the funds provided by Government for the same purpose in the balance sheet.
Q.6. Income and Expenditure Account is a real account.
Ans. False : Income and Expenditure Account is a nominal account since it is prepared to find out surplus or deficit during the accounting period.
Q.7. Entrance fees when capitalised are shown in the Liabilities side of the balance sheet.
Ans. True : It is not then a revenue income and has to be ultimately added to capital fund.
Q.8. Subscriptions in advance in the current accounting period are treated as assets of the Not- For-Profit organisation,
Ans. False : Subscriptions received in advance is a liability for the Not-For-Profit organisations since the members are to be provided services in future.
Q.9. Subscriptions collected for 'Bhagwati Jagran' are treated as income of the social club.
Ans. True : Subscriptions for any social event or celebration is always a revenue income unless a permanent fund has been created for a social function.
Q.10. In case there is a Prize Fund, any income received or accrued from this fund would be added to Prize Fund Account.
Ans. True : Any income received or accrued from a special or specific fund is always added to the fund account.
Q.11. Receipts from the sale of an old asset is treated as an ordinary income.
Ans. False : Only profit or loss from the sale of an old asset is taken into account for the purpose of income and expenditure account.