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JAMB Principles of Accounts 1994 Question 29

Question 29

Not-for-Profit Organisations

The major difference between the receipt and payment account and the income and expenditure account is that while the former

  1. A.is kept by the treasurer, the latter is not
  2. B.deals with all receipts and payments in the year regardless of the time it relates to, the latter is for just that year
  3. C.is a T-account, the latter is not
  4. D.is not in the ledger, the latter is.
Show the answer and explanation

Answer: B (deals with all receipts and payments in the year regardless of the time it relates to, the latter is for just that year)

Explanation

A receipts and payments account records all cash in and out during the year, whatever period it relates to; the income and expenditure account includes only income and expenses of that year (accruals basis).