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JAMB Principles of Accounts 1998 Question 31

Question 31

Not-for-Profit Organisations

The limitations of the receipts and payments account arise mainly because of the reliance on

  1. A.cash movement as evidence of transaction
  2. B.the accounting officer to report
  3. C.the capital account of the organization
  4. D.the transaction papers as evidence of transaction.
Show the answer and explanation

Answer: A (cash movement as evidence of transaction)

Explanation

It records only cash received and paid, so it ignores accruals, prepayments and depreciation.