Commercial Applications
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
Answer
All of these
Reason — The main limitations of Receipts and Payments Account are: (i) It does not reveal the surplus or deficit for the year because it records all receipts and payments irrespective of whether they are capital or revenue and irrespective of the period (previous, current or future); (ii) It does not indicate the financial position of the organisation as it shows only cash position, not assets and liabilities; (iii) It does not disclose detailed information about receipts and payments since they are summarised under headings.
Related Questions
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
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
It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
- Receipts and Payments Account
- Income and Expenditure Account
- Balance Sheet
- None of these