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

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

The Receipts and Payments Account is a summary of the cash book showing all cash and bank receipts and payments, both capital and revenue, with opening and closing balances. It is a real account on cash basis and does not include outstanding or accrued items.

  1. AIt is a nominal account that includes only revenue items on accrual basis
  2. BIt is a summary of the cash book that includes both capital and revenue receipts and paymentsCorrect
  3. CIt excludes the opening and closing cash and bank balances
  4. DIt records outstanding expenses and accrued incomes of the year

Explanation

The Receipts and Payments Account is a summary of the cash and bank transactions of the period, starting with opening balances and ending with closing balances. It includes both capital and revenue items and ignores outstanding or prepaid items. The nominal, accrual-based description fits the Income and Expenditure Account instead.

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