Which of the following options given below are correct?

A. A balancing figure on credit side of Income and Expenditure Account denotes excess of expenses over incomes.
B. Surplus of Income and Expenditure Account is deducted from the Capital/General Fund.
C. Receipts and Payments Account is equivalent to Profit and Loss Account.
D. Receipts and Payments Account records the receipts and payments of revenue nature only.
E. Receipts and Payments Account does not differentiate between capital and revenue receipts.

Choose the correct answer from the options given below.

A, E only

The correct answer is option 1- A, E only.

A. A balancing figure on credit side of Income and Expenditure Account denotes excess of expenses over incomes. This is correct. In an Income and Expenditure Account, if the total expenses exceed the total income, the balance will appear on the credit side, indicating a deficit. This means that the organization spent more than it earned during the period.

B. Surplus of Income and Expenditure Account is deducted from the Capital/General Fund. This is incorrect. A surplus in the Income and Expenditure Account indicates that income exceeded expenses. This surplus is added to the Capital/General Fund rather than being deducted from it. Deficit is deducted from it. It reflects an increase in resources, which should be reflected in the fund balance.

C. Receipts and Payments Account is equivalent to Profit and Loss Account. This is incorrect. The Receipts and Payments Account is a summary of cash transactions and does not provide a measure of profit or loss like the Profit and Loss Account does. Income and Expenditure Account is the summary of income and expenditure for the accounting year. It is just like a profit and loss account prepared on accrual basis in case of the business organisations.

D. Receipts and Payments Account records the receipts and payments of revenue nature only. This is incorrect. The Receipts and Payments Account includes both capital and revenue receipts and payments, providing a comprehensive view of cash flow. Income and expenditure account shows only revenue transactions.

E. Receipts and Payments Account does not differentiate between capital and revenue receipts. This is correct. The Receipts and Payments Account simply lists all receipts and payments without categorizing them into capital or revenue.  Receipt and Payment Account gives summarised picture of various receipts and payments, irrespective of whether they pertain to the current period, previous period or succeeding period or whether they are of capital or revenue nature.