Receipts and Payments Account Explanation, Preparation & Example

Sat, 03/28/2015 - 03:13 -- Umar Farooq

Not for profit organization do not deal with goods and services nor involve in credit transaction. Mostly their transactions are cash receipt and payment and minimum number of other books which are necessary for required information. These books may include the cashbook, membership register, fee collection register, and register for outstanding fee. All these registers may differ according to the information in which not for profit organizations are interested. Entries are recorded throughout the accounting period in this records. At the end of accounting period a nonprofit institution prepare final accounts which include the following accounts.

The cashbook contains a record of cash receipts and cash payments in chorological order. For example if a club receives subscription from its members on different dates of the accounting period, which member’s subscription will be recorded separately on the receiving date in the cashbook receipt side. Similar if club paid salaries to its employees, these will be recorded in different months in the cash book payment side. Here download receipt and payment account format in excel. The main difference between receipt and payment and income and expenditure account is that the former is the summary of cash transactions and the later is the replacement of profit and loss account which records and include revenue nature accounts.

Definition

A receipt and payment account is a summary of all receipts and payments under proper head, which take place during the accounting period. We can understand, in the cashbook similar type of transactions are summarized and their total amount is posted to the receipt account and payment account under the proper title.

Features of Receipt and Payment Accounts

  1. It is summary of cash book. All receipts are recorded on the debit left side and all payments are recorded on the credit right side.
  2. It starts with the cash or bank opening balances. The said balances are written on the debit and bank overdraft is recorded on the credit side of the accounts.
  3. It records all cash receipts and payments whether they are of capital or revenue nature or whether they relate to the current year or not.
  4. Similar type of receipt and payment are gathered under appropriate heads of accounts.
  5. It ends up with the balance of cash or bank at the end or accounting period.  

How to Prepare Receipt and Payment Account

Below is the example of cash receipts and cash payments from the cash book for XYZ Club for the year 2000.

Balance                                (1.1.2000)

                                Cash in Hand                                      Rs. 500

                                Cash at Bank                                      Rs. 2500

Subscription

                                Including Rs. 2000 for 1999 and Rs. 5000 for 2001.

Payments

                                Rent Paid                                             12000

                                Stationary charges                           2000

                                Postage and telephone                 1000

                                Staff salary                                          10000

                                Misc.                                                     700

                                Investment in prize bond             500

                                Investment in DSC                           1000

                                Office equipment                            1000

                                Closing cash balance                       900

 

XYZ Club

Receipts and Payments Account for the year 2000

Receipts

Amounts

 

Payments

Amounts

Balance B/d

Cash in hand     500

Cash at Bank   2500

Subscription

Previous years   2000

Current year  25000

Advance    5000

 

Donations

Membership Fee 

 

 

3000

 

 

 

32000

 

2600

500

 

 

 

38100

 

Rent expenses

Stationary Charges

Postage and Telephone

Salaries to staff

Refreshment charges

Misc. Exp.

Invest. in Prize bonds

Invest in DSC

Office equipment

Closing Balance c/d

Cash in Hand       900

Cash at Bank     8000

12000

2000

1000

10000

700

500

1000

1000

1000

 

 

 

 

38100