JAMB Accounts Principles of Accounts 2018 Paper

Concept:The receipts and payments account is simply a cash summary for a club. It records only cash actually received and cash actually paid. Any amount still owing is ignored because it has not yet changed hands.Explanation:The only actual cash receipt in this case is the donation of $\mathrm{N}30{,}000$.The rent of $\mathrm{N}10{,}000$ is treated as an actual cash payment.The entertainment cost actually paid is $\mathrm{N}6{,}000$.So, total actual payments = $\mathrm{N}10{,}000 + \mathrm{N}6{,}000 = \mathrm{N}16{,}000$.The club is still owing $\mathrm{N}16{,}000$, but this outstanding amount is not recorded in the receipts and payments account because no cash payment has been made for it.Therefore, balance = total receipts − total payments = $\mathrm{N}30{,}000 - \mathrm{N}16{,}000 = \mathrm{N}14{,}000$.Answer:$\mathrm{N}14{,}000$, so the correct option is A.