Receipt and Payment Account

“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.

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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:

1. It is a summary of the cash book.
2. 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.
3. We include both receipts and payments in cash whether they are of capital and revenue nature.
4. We record only cash transactions in receipt and payment account.
5. It generally shows a debit balance. In the case of overdraft balance, its net balance may be credit.
6. Its closing balance shows closing cash in hand and closing cash at the bank.
7. Non-cash items such as depreciation, outstanding expenses, accrued incomes are also shown in this account.

Browse more Topics under Accounting For Not For Profit Organisations

• Meaning, Characteristics and Accounting Records for Not-for-Profit Organisations
• Income and Expenditure Account
• Balance Sheets

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.

1. 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).
2. 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.
3. We do not include the incomes or expenses that do not involve the inflow or outflow of cash.
4. 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.

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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

Solved Example for You

Question: From the following particulars related to Arman Point, prepare a Receipt and Payment account for the year ending 31^st March 2018

Particulars	Amount	Particulars	Amount
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
		Furniture purchased	750
		Office expenses	600
		Closing cash in hand	200

Ans; In the books of Arman Point

Dr.                                    For the year ended 31^st March 2018                                Cr.

Receipts	Amount	Payments	Amount
Balance b/d		Rent	1500
Cash	500	Sports material purchased	2400
Bank	3600	Maintenance expenses	1000
Subscriptions		Salary	1250
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
Donation received	2300	Cash	200
Sale of old sports materials	600	Bank (bal. figure)	3300
	12500		12500