Receipts and payments account tracks cash flows only

Steps:

• Receipts and payments account for clubs records actual cash inflows and outflows, ignoring accruals.
• Shoes are bought on credit, so the purchase creates a liability, not an immediate cash outflow.
• Actual cash leaves when settling the credit with suppliers.
• Thus, only the cash payment to suppliers is entered as an outflow.

Why B is correct:

• By definition, receipts and payments account logs cash transactions; payments to suppliers are cash outflows for settling credit purchases.

Why the others are wrong:

• A: Inventory of shoes is a balance sheet asset, not a cash flow item.
• C: Purchases of shoes on credit are accrued expenses, not cash payments.
• D: Shop profit or loss is an income statement result, derived from revenues and costs, not direct cash.

Final answer: B