Commercial Applications
It alerts the management of a non-trading organisation about decline in cash receipts and increase in cash payments.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
Accounting
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Answer
Receipts and Payments Account
Reason — Since the Receipts and Payments Account summarises all cash inflows (receipts) and cash outflows (payments) under different heads, comparing it across years helps the management identify trends such as a decline in cash receipts (e.g., subscriptions, donations) or an increase in cash payments (e.g., salaries, rent). This alerts the management to take corrective action.
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Related Questions
The primary objective of preparing this Account is to find out the cash position, opening and closing balances of cash in hand and at bank.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
The closing balance of this Account shows surplus or deficit for the year.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these
Receipt and payment account has the following limitation(s).
- It does not reveal surplus or deficit for the year
- It does not indicate financial position of the organisation
- It does not disclose details of receipts and payment
- All of these
This account is equivalent to the Profit and Loss Account of a business concern.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these