Question

The ______________ is the summary of cash and bank transactions which helps the preparation of Income and Expenditure account and Balance Sheet.

• A. income and expenditure account
• B. balance sheet
• C. receipts and payments account
• D. both a and b

Answer 1

The correct option is C receipts and payments account

The Not-for-Profit Organisations are required to prepare financial statements at the end of the each accounting period and the general principles of accounting are fully applicable in their preparation. The final accounts of a not-for-profit organisations consist of the following:

(i) Receipt and Payment Account

(ii) Income and Expenditure Account

(iii) Balance Sheet

The Receipt and Payment account is the summary of cash and bank transactions which helps in the preparation of Income and Expenditure Account and the Balance Sheet. Besides, it is a legal requirement as the Receipts and Payments Account has also to be submitted to the Registrar of Societies along with the Income and Expenditure Account, and the Balance Sheet.