Show the treatment of items of Income and Expenditure Account when there is a specific fund for those items.
Answers
Answer:
The opening balances of cash and bank of Receipts and Payments Account are to be taken as balances of cash and bank at the beginning of the year.
(b) From the additional information, analyse the assets and liabilities at the beginning and record them on proper sides of the balance sheet.
(c) From the Receipts and Payment Account, analyse the transactions related to assets and liabilities of the previous year and record them on the proper sides of the balance sheet. For example, it may happen that an item of asset had been completely sold out so the same could not find place in the new balance sheet.
From the receipts side of the Receipts and Payments Account, item of that asset at the end of previous year can be ascertained and shown on the assets side of the Opening Balance Sheet (i.e., Closing Balance Sheet of the previous year). It means that the same item was appearing as an asset in the previous balance sheet.