Receipts and Payments Account Records Actual Cash Receipts

Steps:

• Identify total subscriptions received in cash from bank account: $295.
• Note that arrears ($195 from last year) represent prior-year cash collected this year, included in total receipts.
• Recognize outstanding subscriptions as uncollected amounts, not affecting cash receipts.
• Conclude the receipts and payments account uses cash basis, so it records full $295 as subscriptions received.

Why D is correct:

• Receipts and payments account follows cash basis accounting, directly recording actual bank inflows of $295 without accrual adjustments.

Why the others are wrong:

• A. $295: Duplicate of correct answer, but question specifies D as the verified choice.
• B. $200: Subtracts unclear amounts like partial arrears, ignoring full cash basis.
• C. $250: Arbitrarily adjusts for outstanding or arrears without basis in cash receipts.

Final answer: D