Question

The Income and Expenditure Account is prepared on which basis with the help of the Receipts and Payments Account?

Options

• Accrual basis

• cash basis

• Both

• None of these

Answer 1

Accrual basis

Explanation:

With the help of the Receipts and Payments Account and additional information relating to outstanding and prepaid outstanding, depreciation, and so on, the Income and Expenditure Account is generated on an accrual basis. As a result, several entries in the Receipts and Payments must be modified.