Majority of the candidates that attempted this question did not understand the features and the performance was poor. The expected answers include:
Features:
- Receipt and Payment Account–
- It is a real account;
- It is a prime book;
- It is a summary of cash and cheque transactions of a club;
- It has opening and closing balances;
- It records both capital and revenue transactions;
- Its closing balance is transferred into the balance sheet;
- Its records are supported by source documents;
- It is used by “Not-for Profit Making” organizations.
(b) Income and Expenditure Account -
- It is a nominal account;
- It is prepared in the form of profit and loss accounts;
- It records revenue receipts and revenue expenditure;
- It allows adjustments for prepayments and accruals;
- Its closing balance represents surplus or deficit;
- It is used by not-for-profit making organizations.
(c) Trading Account -
- It is a nominal account;
- It is prepared by trading entities;
- It is used to determine cost of goods available for sale;
- It is used to determine cost of goods sold;
- It is used to ascertain gross profit or gross loss.
(d ) Profit and Loss Account –
- It is a nominal account;
- It is prepared by trading entities;
- It is used to ascertain net profit or net loss;
- It allows adjustments for accruals and prepayments.
( e) Appropriation Account of a Partnership –
- It is a nominal account;
- It is an account in which the profit/loss for the partners is distributed;
- It shows the net profit/loss brought down for the period;
- It shows interest on partners’ drawings;
- It shows partners’ salaries for the period;
- It shows partners’ commission;
- It shows interest on partners’ capital.
