Question

Which of the following items should be entered in the receipts and payments account of a club?
I. Sale of old newspapers
II. Loss on sale of some asset
III. Payments for investment
Select the correct answer using the codes given.

• A. I, II and III
• B. I and III
• C. I and II
• D. II and III

Answer 1

Answer: (B)

I and III

Receipts and payments account record all the cash transactions that take place in the current year whether related to this year or not. All the receipts and payments of current year are recorded in the account.

I - Sale of old newspapers is an item that comes in receipts and payments account as cash is received when newspapers are sold.

II - Loss on sale of an asset is an item of nominal account. Income and expenditure is a nominal account and includes loss, expense, income, gains. loss on sale is a loss on the account of sale of an item which will come in income and expenditure account and not receipts and payments account.

III - Payments for investment is a capital expenditure, It is a cash expenditure hence will be shown in receipts and payments account.