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Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?
- a)It is based on the accrual system of accounting.
- b)It records only revenue receipts and payments.
- c)It includes all cash and bank transactions.
- d)It is used to ascertain surplus or deficit for an accounting period.
Correct answer is option 'C'. Can you explain this answer?
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Which of the following statements is true regarding the Receipts and P...
The Receipts and Payments Account is a summary of all cash and bank transactions, including both capital and revenue items, without considering the accrual system of accounting.
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Which of the following statements is true regarding the Receipts and P...
Understanding the Receipts and Payments Account
The Receipts and Payments Account is a fundamental financial statement for not-for-profit organizations. It serves a specific purpose and operates under certain principles.
Characteristics of the Receipts and Payments Account
- Cash and Bank Transactions: This account exclusively records all cash and bank transactions, providing a comprehensive overview of the financial activities over a specified period.
- Not Accrual-Based: Unlike other accounts that may follow the accrual system, the Receipts and Payments Account does not record income and expenses when they are incurred. Instead, it only reflects actual cash received and payments made.
- Comprehensive Record: It includes both revenue receipts (like donations, membership fees) and capital receipts (like sale of assets), as well as all payments, whether for operational expenses or capital expenditures.
Purpose of the Receipts and Payments Account
- Surplus or Deficit: One of the primary uses of this account is to ascertain whether the organization has a surplus or deficit during the accounting period. By comparing total receipts to total payments, stakeholders can assess the financial health of the organization.
- Not a Detailed Statement: It does not provide details about the income and expenditure in a categorized manner, which is typically found in the Income and Expenditure Account.
In conclusion, option 'C' is correct because the Receipts and Payments Account includes all cash and bank transactions, making it a vital tool for financial analysis in not-for-profit organizations.
The Receipts and Payments Account is a fundamental financial statement for not-for-profit organizations. It serves a specific purpose and operates under certain principles.
Characteristics of the Receipts and Payments Account
- Cash and Bank Transactions: This account exclusively records all cash and bank transactions, providing a comprehensive overview of the financial activities over a specified period.
- Not Accrual-Based: Unlike other accounts that may follow the accrual system, the Receipts and Payments Account does not record income and expenses when they are incurred. Instead, it only reflects actual cash received and payments made.
- Comprehensive Record: It includes both revenue receipts (like donations, membership fees) and capital receipts (like sale of assets), as well as all payments, whether for operational expenses or capital expenditures.
Purpose of the Receipts and Payments Account
- Surplus or Deficit: One of the primary uses of this account is to ascertain whether the organization has a surplus or deficit during the accounting period. By comparing total receipts to total payments, stakeholders can assess the financial health of the organization.
- Not a Detailed Statement: It does not provide details about the income and expenditure in a categorized manner, which is typically found in the Income and Expenditure Account.
In conclusion, option 'C' is correct because the Receipts and Payments Account includes all cash and bank transactions, making it a vital tool for financial analysis in not-for-profit organizations.
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Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?a)It is based on the accrual system of accounting.b)It records only revenue receipts and payments.c)It includes all cash and bank transactions.d)It is used to ascertain surplus or deficit for an accounting period.Correct answer is option 'C'. Can you explain this answer?
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Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?a)It is based on the accrual system of accounting.b)It records only revenue receipts and payments.c)It includes all cash and bank transactions.d)It is used to ascertain surplus or deficit for an accounting period.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?a)It is based on the accrual system of accounting.b)It records only revenue receipts and payments.c)It includes all cash and bank transactions.d)It is used to ascertain surplus or deficit for an accounting period.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?a)It is based on the accrual system of accounting.b)It records only revenue receipts and payments.c)It includes all cash and bank transactions.d)It is used to ascertain surplus or deficit for an accounting period.Correct answer is option 'C'. Can you explain this answer?.
Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?a)It is based on the accrual system of accounting.b)It records only revenue receipts and payments.c)It includes all cash and bank transactions.d)It is used to ascertain surplus or deficit for an accounting period.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?a)It is based on the accrual system of accounting.b)It records only revenue receipts and payments.c)It includes all cash and bank transactions.d)It is used to ascertain surplus or deficit for an accounting period.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements is true regarding the Receipts and Payments Account of a not-for-profit organization?a)It is based on the accrual system of accounting.b)It records only revenue receipts and payments.c)It includes all cash and bank transactions.d)It is used to ascertain surplus or deficit for an accounting period.Correct answer is option 'C'. Can you explain this answer?.
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