by Receipts and Payments Account is a real account showing summary of all cash and bank transactions occurred during the accounting year. It is prepared at the end of the accounting year. All cash and bank transactions, taken from the cash book are shown under suitable headings and titles, such as subscriptions, salaries, rent, electricity charges etc.
It is worth mentioning that Receipts and Payments Account is a summary of all cash and bank transactions under various suitable heads. For example, entrance fees received from the members on different dates appear on the debit side of the cash book on respective dates.
Features of Receipts and Payments Account:
(i) It is a real account and summarizes all cash transactions of non-profit organizations.
(ii) It starts with the opening balance of cash and bank balances and ends with the closing balance of cash and bank balances.
(iii) It is similar to cash book and contains all receipts on debit side and payments on credit side.
(iv) Distinction of capital and revenue is not made while recording cash transactions in it.
(v) All actual receipts and actual payments (whether they are related to the past, present or future accounting period) of the relevant accounting period are recorded in this account.
It should be noted that Receipts and Payments Account is not as comprehensive as Trial Balance, even then it helps in preparation of final accounts of non-profit organization if it is supported with opening balance sheet and all relevant information and adjustments. For this reason, sometimes this is also known as Cash Trial.
Method of Preparation
As we know, we prepare Receipts and payment account with all the cash receipts and cash payments for the whole year. We determine the net result of cash receipts and cash payments of a fixed time through this account.
The left-hand side of this account is known as “Receipts” and right-hand side of this account is known as “Payments”. All cash receipts are recorded on the left-hand side, while all cash payments are recorded on the right-hand side and are arranged in a classified form.
- We start with taking opening balances of cash in hand and cash at bankand enter them on the debit side. (if there is bank overdraft at the beginning, we enter the same on credit side).
- Now, we enter the total amounts of all receipts on the debit side and total amount of all payments on credit side (whether capital or revenue) and whether they are of past, current and future periods.
- We do not include the incomes or expenses that do not involve the inflow or outflow of cash.
- Now, we will find the difference between the total of the debit side and the total of the credit side of the account, the amount so found will be the closing balance of cash or bank.
In case, if the credit side is more than the debit side, the amount will be debited as bank overdraft and we will close the account.
Proforma of Receipt and Payment Account
Receipt and Payment Account
| Receipts | Amount (Rs.) | Payments | Amount (Rs.) |
| Balance b/d | Balance b/d (overdraft) | ||
| Cash in hand | Wages and Salaries | ||
| Cash at bank | Rent | ||
| Subscriptions | Rates and Taxes | ||
| General Donations | Insurance | ||
| Sales of newspaper | Printing and Stationery | ||
| Sale of Sports materials | Advertisement | ||
| Interest on fixed deposits | Sundry expenses | ||
| Interest in investments | Telephone charges | ||
| Locker rent | Entertainment expenses | ||
| Sales of scraps | Audit Fees | ||
| Received from charity | Honorarium | ||
| Miscellaneous receipts | Repairs and Renewals | ||
| Sale of Investments | Purchase of Assets | ||
| Sale of Fixed Assets | Purchase of Investments | ||
| Life Membership Fees | Balance c/d | ||
| Entrance fees | Cash in hand | ||
| Balance c/d (overdraft) | Cash at bank | ||
| xxx | xxx |
