“A receipt and payment account is a summarized cash book for a given period”.”This is a summary of the cash transactions as in the cash book”. Non-profit organizations prepare receipt and payment account at the end of the year. With the help of this account and some additional information, we prepare income and expenditure account to disclose the true results of non-profit organizations.
Receipt and Payment Account
Receipt and payment account cannot disclose the true result of a non-profit organization. We prepare this account on the basis of the information available from the cash book.
Characteristics of Receipt and Payment Account
Following are the characteristics of receipt and payment account:
- It is a summary of the cash book.
- We record all the cash receipts during the whole year on its debit side. Whereas, we write all the cash payments for the whole year on its credit side.
- We include both receipts and payments in cash whether they are of capital and revenue nature.
- We record only cash transactions in receipt and payment account.
- It generally shows a debit balance. In the case of overdraft balance, its net balance may be credit.
- Its closing balance shows closing cash in hand and closing cash at the bank.
- Non-cash items such as depreciation, outstanding expenses, accrued incomes are also shown in this account.
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 bank and 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|
|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|
Solved Example for You
Question: From the following particulars related to Arman Point, prepare a Receipt and Payment account for the year ending 31st March 2018
|Opening cash balance||500||Sale of old sports materials||600|
|Opening bank balance||3600||Donation received||2300|
|Subscriptions collected for||Rent paid||1500|
|2016-17 ₹ 250||Sports materials purchased||2400|
|2017-18 ₹ 3800||Purchase of refreshments||300|
|2018-19 ₹ 450||4500||Expenses for maintenance||1000|
|Sale of refreshments||500||Salary paid||1250|
|Entrance fees||500||Tournament expenses||1200|
|Closing cash in hand||200|
Ans; In the books of Arman Point
Dr. For the year ended 31st March 2018 Cr.
|Cash||500||Sports material purchased||2400|
|2016-17 250||Tournament expenses||1200|
|2017-18 3800||Furniture purchased||750|
|2018-19 450||4500||Office expenses||600|
|Sale of refreshments||500||Purchase of refreshment||300|
|Entrance fees||500||Balance c/d|
|Sale of old sports materials||600||Bank (bal. figure)||3300|