Commercial Applications
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
Accounting
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Answer
Receipts and Payments Account
Reason — The primary objective of preparing the Receipts and Payments Account is to find out the cash position — the opening and closing balances of cash in hand and at bank — and to show the receipts and payments under different heads for the accounting year. It tells at a glance the cash position of the organisation both at the beginning and the end of the accounting year.
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Related Questions
A charitable organization has recently sold old office furniture and purchased new sports equipment. In the Receipts and Payments Account, where would these transactions appear, and what impact would they have on the final balance?
- Sale of furniture appears on the debit side; purchase of sports equipment appears on the credit side, reducing the final balance.
- Sale of furniture appears on the credit side; purchase of sports equipment appears on the debit side, increasing the final balance.
- Both transactions appear on the debit side, reducing the final balance.
- Both transactions appear on the credit side, increasing the final balance.
All cash payments are recorded on the …………… side of the receipt and payment accounts.
- Credit
- Debit
- Both (A) and (B)
- 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
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