Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounts for Non Profit Organsiation

Question:

In which of the following account does every cash transaction has to be entered?

Options:

Receipts and Payment Account

Income and Expenditure account

Balance Sheet

Both 1 and 2

Correct Answer:

Receipts and Payment Account

Explanation:

The correct answer is option 1- Receipts and Payment Account.

Receipt and Payment Account 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. For example, subscriptions received from the members on different dates which appear on the debit side of the cash book, shall be shown on the receipts side of the Receipt and Payment Account as one item with its total amount. Similarly, salary, rent, electricity charges paid from time to time as recorded on the credit side of the cash book but the total salary paid, total rent paid, total electricity charges paid during the year appear on the payment side of the Receipt and Payment Account. Thus, Receipt and Payment Account gives summarised picture of various receipts and payments, irrespective of whether they pertain to the current period, previous period or succeeding period or whether they are of capital or revenue nature.