Accountancy Part AAccounts for Non Profit Organsiation

The amount received from the sale of furniture for ₹7,000 (Book value…

The amount received from the sale of furniture for ₹7,000 (Book value ₹10,000). The amount to be shown in the receipts and payments account will be:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → ₹7,000 on the receipts side

A Receipts and Payments Account is a summary of the actual cash and bank transactions. It shows the cash really received, whether capital or revenue, and ignores book values and profit or loss. The furniture brought in ₹7,000 in cash, so ₹7,000 is shown on the receipts side.

Why the other options are incorrect

Option (1) ₹10,000 on the receipts side — Incorrect. ₹10,000 is only the book value; that much cash was never received.
Option (3) ₹3,000 on the payment side — Incorrect. ₹3,000 is the loss on sale, which goes to the Income and Expenditure Account; no cash was paid out.
Option (4) ₹3,000 on the receipts side — Incorrect. A loss is not a receipt of cash.

Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), but it is still in the CUET 2026 syllabus, so do not skip it.

NCERT (Pre-rationalised edition):
Receipt and Payment Account – “It is prepared at the end of the accounting year on the basis of cash receipts and cash payments recorded in the cash book. It is a summary of cash and bank transactions under various heads.”