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SS2: FINANCIAL ACCOUNTING - 2ND TERM

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his is the account that shows the summary of the cash book over a particular period of time, receipts being debited and payments credited. Amount owing or prepaid will not be shown in this account.

Features of Receipts & Payments Account

1. It is a real account

2. Balance represents cash in hand

3. Only actual receipts and payment are recorded.

4. Include capital and revenue items.

5. Accruals and prepayments are not included.

Limitation of Receipt and Payment Account

1 There is no disclosure of accruals and prepayment.

2. It is not possible to determine surplus or deficit.

3. Non-cash items like depreciation are not disclosed.

4. There is no distinction between capital and revenue items.

5. There is no figure for net income or net expenditure.

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