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
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.
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