Given: I. It records subscription in arrears II. Payments of liabilities is effected III. The account does not show if cash payment is revenue or…

JAMB Accounting 2023 👁 26 views

Given:

I. It records subscription in arrears
II. Payments of liabilities is effected
III. The account does not show if cash payment is revenue or capital expenditure
IV. It performs the same function as cash book

The features of receipts and payment account includes:

  1. I,II and IV
  2. II,III and IV ✓
  3. III and IV
  4. I,II and III

Explanation

Receipts and payments account works like a cashbook for non-profits. It records all cash in and out. It doesn’t distinguish between revenue and capital items. It just shows money movements.

This account doesn’t record subscriptions in arrears because those haven’t been paid yet. It only records actual cash received, not amounts owed.

Key point: This is a summary of actual cash transactions, not accrual-based accounting.

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