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

Assessment: JAMB UTME - Principles of Accounts - 1998 Subject: Financial Accounting

Question 1 Report

The limitations of the receipts and payments account arise mainly because of the reliance on?
Answer Details
The limitations of the receipts and payments account arise mainly because of the reliance on cash movement as evidence of transaction. This means that only cash transactions are recorded, which may not give a complete picture of the financial status of the organization. Non-cash transactions such as credit sales, purchases on credit, and depreciation are not taken into account. Also, the timing of cash receipts and payments may not correspond with the actual timing of the transaction. In addition, the receipts and payments account does not provide information on the capital account of the organization.
Read lesson note on Accounts Of Not-for-profit-making Organizations (JAMB)
Read lesson note on Incomplete Records And Single Entry (JAMB)
Read lesson note on Nature And Significance Of Accounting (JAMB)
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