Question

Consider the following statements

Statement 1 - "Receipt and Payment Account is equivalent to profit and loss account".

Statement 2 - Receipt and Payment Account is prepared at the end of the accounting year.

Options

• Only statement 1 is correct.

• Only statement 2 is correct.

• Both the statement is correct.

• None of the above

Answer 1

Only statement 2 is correct.

Explanation:

On the basis of cash receipts and cash payments recorded in the cash book, the Receipt and Payment Account is generated at the conclusion of the accounting year. It's just a list of cash and bank transactions. Subscriptions received from members on various dates that appear on the debit side of the cash book, for example, must be shown on the receipts side of the Receipt and Payment Account.