Commercial Applications
Answer
The five main uses of Receipts and Payments Account are as follows:
Basis for preparing other final accounts — Receipts and Payments Account serves as the basis for preparing the Income and Expenditure Account and the Balance Sheet of a non-trading organisation.
Alerts management about cash trends — It alerts the management about any decline in cash receipts and any increase in cash payments
Informs members about main sources and uses of cash — It clearly informs the members of the organisation about the main sources of income and the major items of expenditure.
Shows cash position — It tells at a glance the cash position of the organisation both at the beginning and at the end of the accounting year.
Fulfils statutory requirements — Receipts and Payments Account is legally required under the Cooperative Societies Act and other laws. Therefore, preparing it fulfils the statutory obligations of the organisation.