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CMA Foundation · Fundamentals of Financial and Cost Accounting · Financial Statements of a Not-for-Profit Organisation

Which of the following statements about the Receipts and Payments Account of a not-for-profit organisation is correct?

The Receipts and Payments Account is a real account summarising the cash book. It opens with the opening cash and bank balances, records all actual receipts and payments of capital and revenue nature, and closes with the closing balances, ignoring accrual adjustments.

  1. AIt is a nominal account that records only income and expenses of the year
  2. BIt is a real account that summarises cash and bank receipts and payments, starting with opening balancesCorrect
  3. CIt includes outstanding expenses and accrued incomes of the year
  4. DIt excludes capital receipts and payments such as sale of investments

Explanation

The Receipts and Payments Account is a summary of the cash book, so it is a real account. It starts with opening cash and bank balances and ends with closing balances. It records both capital and revenue items and ignores outstanding or accrued amounts, so the other options are wrong.

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