Skip to content

CSEET · Fundamentals of Accounting · Accounting for Non-Profit Organizations

Which of the following statements about the Receipts and Payments Account of a non-profit organisation is correct?

The Receipts and Payments Account summarises all cash and bank transactions of the period, beginning with opening balances and ending with closing balances. It follows the cash basis, so it ignores outstanding and prepaid items and does not show surplus or deficit.

  1. AIt is a nominal account that records only revenue items of the year
  2. BIt is a summary of the cash and bank transactions of the period, starting with opening balances and ending with closing balancesCorrect
  3. CIt records outstanding and prepaid items of the year
  4. DIt shows the surplus or deficit of the organisation for the year

Explanation

The Receipts and Payments Account is a real account in the nature of a summarised cash book. It begins with opening cash and bank balances and ends with closing balances. It does not adjust for outstanding or prepaid items and does not show surplus or deficit; that is the job of the Income and Expenditure Account.

Did you get it right without looking?

One question tells you little. A timed set on Accounting for Non-Profit Organizations shows your real accuracy, how long you take and where you lose marks.

Practise Accounting for Non-Profit OrganizationsFree diagnostic mock

More Accounting for Non-Profit Organizations questions