RECEIPTS AND PAYMENTS ACCOUNT

Receipts and Payments Account records all the cash receipts and cash payments of non-profit organisations. It is a real account. It is prepared at the end of the year and records all the transactions whether it belongs to current, future or past years. All the capital and revenue nature items are posted into it. This accounts starts with opening balance of cash and bank and ends with the closing balance of the same.

ACCORDING TO WILLIAM PICKLES

“Receipts and Payments Account is nothing more than a summary of the Cash Book over a certain period analyzed and classified under suitable headings. It is the form of account most commonly adopted by treasurers of societies, clubs, associations etc., when preparing the results of the year’s working.” 

FEATURES OF RECEIPTS AND PAYMENTS ACCOUNT

NATURE OF ACCOUNT

It is real account. The items recorded in this account are both of capital and revenue nature. The rule followed while posting the items is:

DEBIT WHAT COMES IN, CREDIT WHAT GOES OUT

As a result, receipts are recorded on Debit side and payments are recorded on Credit side.

BASIS OF PREPARATION

The receipts and payments account is maintained on cash basis. The transactions are recorded when there is cash paid or cash received for the same.

CAPITAL AND REVENUE ITEMS

This account records both capital and revenue items. The capital receipt as well as revenue receipt is shown at debit side of the account. The capital payment as well as revenue payment is shown at the credit side of this account.

OPENING AND CLOSING BALANCES

The opening and closing balance of the receipts and payments account show the cash in hand or cash at bank of the accounting period.

PERIOD TO WHICH ITEM BELONGS

Receipt and Payment Account records the entire amount paid or received in cash whether it is related to current, past or future year.

ADJUSTMENTS

Receipt and Payment Account records no adjustment related to Accrued Income, Outstanding Expenses, Prepaid Expenses and pre-received incomes.

PURPOSE

The purpose of preparing this account is to know about the cash position of the non- profit organisation. It does not tell about whether current incomes exceed the current expenditures or not. It merely shows the closing balance of cash in hand and cash at bank at the end of accounting period.

DOES NOT RECORD NON-CASH EXPENSES

Receipt and Payment account records only cash items. It does not record non –cash expenses like depreciation.

LIMITATIONS OF RECEIPTS AND PAYMENTS ACCOUNT

DOES NOT SHOW ITEMS ON ACCRUAL BASIS: The receipt and payment account does not show items on accrual basis. It records the items on cash basis i.e. only those items are recorded for which the cash is received or paid.

DOES NOT SHOW SURPLUS OR DEFICIT: The receipt and payment account does not record any adjustment regarding accrued income, outstanding expenses, prepaid expense, income received in advance. Thus it does not show the surplus or deficit of the year. Rather, it shows the opening and closing balance of cash in hand.

DO NOT DIFFERENTIATE BETWEEN CAPITAL AND REVENUE ITEMS: The receipt and payment account do not differentiate between capital and revenue items. It records all the assets, liabilities, income and expenditure under single account.

DO NOT DEPICT ACCURATE CURRENT YEAR DATA: The items recorded in the receipt and payment account may belong to the past or future year. In this way, it does not depict the true transactions related to current year only.

DOES NOT RECORD NON-CASH EXPENSES: Receipt and Payment account records only cash items. It does not record non –cash expenses like depreciation which must be provided for to show the real value of assets.

FORMAT OF RECEIPT AND PAYMENT ACCOUNT

DR. RECEIPTS AND PAYMENTS ACCOUNT for the year ended…       CR.

RECEIPTS	₹	PAYMENTS	₹
To balance b/d (Opening Balance)      Cash in Hand      Cash at Bank To Subscriptions:      For Previous year      For Current year      For Next year To General Donations To Entrance/ Admission fees To General Grants To Sale of old newspapers, grass To Dividends To Rent Received To Interest Received To Miscellaneous Receipts To Legacies To Endowment Fund To Sale of Fixed Assets, etc. To Balance c/d (Bank Overdraft)*		By Balance b/d (Closing Balance)      Cash in Hand      Cash at Bank By Salaries By Rent By Postage Expenses By Advertisement Expenses By Repairs By  Audit Fees By Maintenance Fees By Municipal Tax By Office Expenses By Expenses on show By Miscellaneous Payments By Loan (repayment) By Books By Insurance By Balance c/d (Closing Balance)       Cash in Hand       Cash at Bank*

RECEIPT AND PAYMENT ACCOUNT PDF

The RECEIPT AND PAYMENT ACCOUNT PDF is as follows:

Also Study	Also Study	Also Study	Also Study
Accounting	Non profit organisation	Depreciation	Liquidity ratios
Nature of Accounting	Receipts and Payments Account	Depreciation Accounting	Acid Test Ratio
Benefits of Accounting	Scope of accounting	Hire Purchase Accounting	Cash Ratio
Difference between cost accounting and financial accounting	Financial accounting, cost accounting and management accounting	Difference between hire purchase and instalment system	Financial ratio analysis
Difference between transaction and event	Transactions	Users of Accounting	Ratio analysis
Limitation of Accounting	Capital Expenditure	Instalment System	Difference between consignment and sale
Book Keeping	Revenue Expenditure	Reserves Accounting	Abnormal loss vs normal loss in consignment
Accountancy	Difference between capital and revenue expenditure	Provisions	Treatment of loss on consignment
Accounting as science or an art	Accounting Equation	Single entry system	Accounting treatment of consignment
Book Keeping vs accounting	Deferred Revenue Expenditure	Difference between statement of affairs and balance sheet	Joint venture vs consignment
Book keeping vs accountancy	Capital receipt	IFRS	Departmental Accounting
Accounting vs accountancy	Revenue receipt	Balance Sheet	Methods of departmental accounting
Basis of Accounting	Difference between capital and revenue receipt	Profit and loss Account	Allocation of expenses in departmental accounting
Branches of accounting	Difference between accounting concepts and conventions	Trading Account	Inter-departmental transfers
Cash and mercantile system of accounting	Accounting Standards	Voyage Account	Different types of branches
Accounting Principles	Objectives of Accounting	Accounting for Incomplete Voyage	Departmental vs Branch accounting
Golden ru les of accounting	Process of Accounting	Joint venture	Methods of branch accounting
Double entry system of book keeping	Scope of Accounting	Joint Venture Vs Partnership	Incorporation of branch trial balance
Double entry vs Single entry system	Accounting Concepts vs Accounting conventions	Methods of recording transactions in Joint Venture	Garner VS Murray Rule
History of Accounting	Difference between provisions and reserves	Consignment