The correct answer is: A. It is a nominal account.
A receipt and payment account is a type of nominal account. Nominal accounts are used to record income and expenses for a specific period of time, such as a month or a year. The closing balance of a nominal account is transferred to the profit and loss account, which is then used to calculate the net profit or loss for the period.
Option B is incorrect because receipt and payment accounts do not show all cash and credit items. Only items that are related to income and expenses are recorded in a receipt and payment account.
Option C is incorrect because receipt and payment accounts do not begin with a credit balance. They begin with a debit balance, which represents the opening balance of cash.
Option D is incorrect because the closing balance of a receipt and payment account does not indicate the cash balance. The closing balance of a receipt and payment account is transferred to the profit and loss account, which is then used to calculate the net profit or loss for the period.