Question

Assertion (A): The Receipts and Payments Account reflects non-cash transactions such as depreciation.

Reasoning (R): Depreciation is a non-cash expense that affects the organization’s financial position.

Options

• A is true but R is false.

• A is false but R is true.

• Both A and R are true and R explains A.

• Both A and R are true but R does not explain A.

Answer 1

A is false but R is true.

Explanation:

The Assertion is false since the Receipts and Payments Account is only a cash summary and excludes all non-cash elements. However, the reasoning is true because depreciation is a non-cash expense that affects the value of fixed assets, thus impacting the organization’s net financial position on the balance sheet.