Non-Cash transactions will be excluded from :

Receipt and Payment A/C

The correct answer is option (1) : Receipt and Payment A/c.

* All other accounts and balance sheet include all the adjustment of non cash items also.

The "Receipts and Payments" account is a simplified method of accounting used by non-profit organizations to record only cash transactions. This method is often used to track cash flow, maintain a record of cash receipts and cash payments, and provide a summary of the organization's financial position.

The Receipt and Payment Account has the following features-

1. It is a summary of the cash book. Its form is identical with that of simple cash book (without discount and bank columns) with debit and credit sides. Receipts are recorded on the debit side while payments are entered on the credit side.

2. It shows the total amounts of all receipts and payments irrespective of the period to which they pertain . For example, in the Receipt and Payment account for the year ending on March 31, 2016, we record the total subscriptions received during 2015–16 including the amounts related to the years 2014–2015 and 2016-2017. Similarly, taxes paid during 2015–16 even if they relate to the years 2014–15 and 2016–2017.

3. It includes all receipts and payments whether they are of capital nature or of revenue nature.

4. No distinction is made in receipts/payments made in cash or through bank. With the exception of the opening and closing balances, the total amount of each receipt and payment is shown in this account.

5. No non-cash items such as depreciation outstanding expenses accrued income, etc. are shown in this account.

6. It begins with opening balance of cash in hand and cash at bank (or bank overdraft) and closes with the year end balance of cash in hand/ cash at bank or bank overdraft. In fact, the closing balance in this account (difference between the total amount of receipts and payments) which is usually a debit balance reflects cash in hand and cash at bank unless there is a bank overdraft.