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Limitations of receipts and payments account.
Can someone explain the paragraph on limitations of receipts and payments account in the page 9.3 of the IPCC study material of accounting?
Replies (1)
receipts and payments a/c considers all cash and bank transactions including,
transactions of capital nature
transactions relating to periods other than the reporting period(previous year or next year)
hence receipts and payments a/c doesn't represent the actual surplus of the entity(which is arrived at considering only revenue natured items relating to the current year whether or not actually paid or received). hence, receipts and payments a/c cannot be used to ascertain the true of the financial results of the entity.
transactions of capital nature
transactions relating to periods other than the reporting period(previous year or next year)
hence receipts and payments a/c doesn't represent the actual surplus of the entity(which is arrived at considering only revenue natured items relating to the current year whether or not actually paid or received). hence, receipts and payments a/c cannot be used to ascertain the true of the financial results of the entity.
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