Question

Which of the following items should be entered in the Receipts and Payment Account of a club ?
1. Sale of old newspapers.
2. Loss in sale of some assets.
3. Payments for investments.
Select the correct answer from the codes given below:

• A. 1 , 2 and 3
• B. 1 and 3
• C. 1 and 2
• D. 2 and 3

Answer 1

The correct option is B 1 and 3

Receipts and payments account records the inflow and outflow of cash during a period.

1. Sale of old newspapers is a routine activity which results in inflow of cash, hence should be entered in the receipts and payments account.

2. Loss in the sale of some assets do not result in flow of cash, hence should not be entered.

3. Payments for investments require outflow of cash, hence should be entered in the receipts and paymentsaccount.