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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 best describes the Receipts and Payments Account of a not-for-profit organisation?

The Receipts and Payments Account is a summary of the cash book for the period. It starts with opening cash and bank balances, records all receipts and payments, both capital and revenue, and ends with closing balances. It is not prepared on accrual basis.

  1. AA nominal account that records only incomes and expenses of the year on accrual basis
  2. BA summary of cash and bank transactions of the period, starting with opening balances and ending with closing balancesCorrect
  3. CA statement showing assets and liabilities at the end of the year
  4. DA statement showing only revenue items of cash nature, excluding capital receipts

Explanation

The Receipts and Payments Account is a summary of the cash book. It opens with the opening cash and bank balances, records all receipts on the debit side and all payments on the credit side (capital and revenue alike), and ends with the closing balances. Option A describes the Income and Expenditure Account, and C describes the Balance Sheet.

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