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CA Foundation · Accounting · Financial Statements of Not-for-Profit Organisations

Which of the following is a feature of a Receipts and Payments Account of an NPO?

A Receipts and Payments Account begins with opening cash and bank balances and summarises all cash receipts and payments, both capital and revenue, whatever period they relate to. It does not account for outstanding or prepaid items, which are accrual adjustments.

  1. AIt starts with opening cash and bank balances and records all receipts and payments, whether capital or revenue, irrespective of the period they relate toCorrect
  2. BIt records only revenue items and excludes capital receipts and payments
  3. CIt records outstanding and prepaid items on an accrual basis
  4. DIt starts with opening balances of all assets and liabilities

Explanation

The Receipts and Payments Account is a summary of the cash book. It opens with opening cash and bank balances, shows both capital and revenue items, and ignores accrual adjustments such as outstanding and prepaid amounts. Option C describes the Income and Expenditure Account, so it is wrong.

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