JAMB Principles of Accounts 1999 Question 30

Question 30

Not-for-Profit Organisations

A credit balance on a receipts and payments account indicates that the non-profit making organization

  1. A.had more revenues than expenses during the period
  2. B.did not owe much liabilities during the period
  3. C.received more cash than it paid out during the period
  4. D.made more cash payments than it received during the period.
Show the answer and explanation

Answer: D (made more cash payments than it received during the period.)

Explanation

A credit balance means payments exceeded cash available, i.e. a bank overdraft.