BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A Debit balance
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Surplus or Deficit
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A Credit Balance
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Capital fund
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Detailed explanation-1: -Hence the debit balance of receipts and payments account just like cash account reflects closing balance of cash at the end of the year after taking into account all the payments and receipts.
Detailed explanation-2: -Receipts and Payments Account generally shows a debit balance.
Detailed explanation-3: -Receipts and payments account is like a cash book which records all the receipts and payments irrespective of the period. Excess of debit over credit is a closing debit balance and it indicates the cash balance.
Detailed explanation-4: -A cash receipt is an accounting entry that documents the collection of cash from a customer. Cash receipts typically increase (debits) the company’s cash balance on its balance sheet. Simultaneously, they decrease (credits) either accounts receivable or another asset account.
Detailed explanation-5: -Purchase account always shows debit balance.