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Question
Write the steps in ascending order of Conversion of a Receipt and Payment Account into an Income and Expenditure Account:
(i) Adjusting the revenue receipts on the debit side to include outstanding incomes and incomes relating to the current year received earlier and to exclude amounts received in arrears or in advance.
(ii) identifying and showing non-cash expenses and losses on the debit side of the Income and Expenditure Account.
(iii) computing and showing profits/losses from trading and/or social activities on the credit/debit side of the Income and Expenditure Account.
(iv) Ascertaining the surplus or deficit as the dosing balance of the Income and Expenditure Account.
(v) adjusting revenue payments on the credit side.
Options
i, v, ii, iii, iv
i, ii, iii, iv, v
ii, iii, iv, v, i
iii, ii, i, iv, v
Solution
i, v, ii, iii, iv
Explanation:
Receipt and Payment Account to Income and Expenditure Account Conversion: This procedure consists of five steps:
(i) Adjusting the revenue receipts on the debit side to include outstanding incomes and incomes relating to the current year received earlier and excluding amounts received in arrears or in advance.
(v) adjusting revenue payments on the credit side.
(ii) identifying and showing non-cash expenses and losses on the debit side of the Income and Expenditure Account.
(iii) computing and showing profits/losses from trading and/or social activities on the credit/debit side of the Income and Expenditure Account; and
(iv) ascertaining the surplus or deficit as the dosing balance of the Income and Expenditure Account.
