Receipt and Payment Account: Learning Objectives: 1. Define and explain receipt and payment account. 2.

Why a receipt and payment account is prepared? 3. Prepare a receipt and payment account. Definition and Explanation: Receipt and payment account is a mere summary of cash book for a year. It begins ith the cash in hand at the commencement and ends ith that at the close of the year. !imilarly to cash account" in receipts and payments account receipts are sho n on the debit side hile payments are sho n on the credit side" ithout any distinction bet een capital and re#enue. $oreo#er" it does not include an unpaid expenditure not any unreali%ed income relating to the period under re#ie and so fails to re#eal the financial position on the concern. Format of Receipt and Payment Account: Receipts $ Payments $

Example: Receipt and Payment Account Receipts $ &o 'alance b(d1"2,&o )nnual subscription1".3&o *ife membership fees2/&o +ntrance fees2,&o interest on securities10&o sundry receipts /3"/3Payments $ 'y general expenses//'y salaries and ages//'y furniture0-'y rent" rates 1 taxes/-'y printing 1 stationary12/ 'y 2epairs1/'y 'alance c(d 31/ 3"/3-

Definition noun an accounting method in which receipts and payments are accounted for when the money is actually received or paid out, not necessarily when they are entered in the boo s! A summary of receipts and payments in a given period"year! #his is the simplest form of accounts! $t does not reflect the true financial position of the organisation since it is only a record of the money flow! An income and expenditure account is a more accurate indicator! Receipts and Payments Accounts Receipts and payments Account Meaning : Receipts and Payments Account is a summary of cash transactions appearing in the Cash Book. It is prepared at the end of the year from the Cash Receipts Journal and Cash Payments Journal. All the receipts and payments during an accounting period are included in it under suitable headings. or e!ample" subscriptions recei#ed from members on different dates appear in the cash book but the total subscriptions recei#ed during the year appear in the Receipts and Payments Account. $imilarly" salaries and %ages paid on different dates are recorded in detail in the cashbook but the total salaries and %ages paid during the year appear in the Receipts and Payments Account. Receipts and payments Account Meaning : Receipts and Payments Account is a summary of cash transactions appearing in the Cash Book. It is prepared at the end of the year from the Cash Receipts Journal and Cash Payments Journal. All the receipts and payments during an accounting period are included in it under suitable headings. or e!ample" subscriptions recei#ed from members on different dates appear in the cash book but the total subscriptions recei#ed during the year appear in the Receipts and Payments Account. $imilarly" salaries and %ages paid on different dates are recorded in detail in the cashbook but the total salaries and %ages paid during the year appear in the Receipts and Payments Account. In the %ords of &illiam Pickles" 'Receipts and Payment Account is nothing more than a summary of the Cash Book o#er a certain period" analy(ed and classified under suitable headings. It is the form of account most commonly adopted by the treasures of societies" clubs" associations" etc." %hen preparing the results of the year)s %orking.' *he main features of Receipts and Payments Account are as follo%s : +i, *he account is a summary of the cashbook combining cash and bank transactions" +ii, *he account begins %ith the opening balance of cash in hand and at bank. Cash in hand is %ritten on the debit side because it al%ays sho%s a debit balance. Cash at bank +debit balance, is %ritten on the debit side" but o#erdraft +credit balance, is %ritten on the credit side.

+iii, Receipts and Payments Account is a real account. *herefore" the rule of real account +debit %hat comes in and credit %hat goes out, is follo%ed %hile preparing it. +i#, All cash receipts" both of re#enue and capital nature" are sho%n on the debit +receipts, side" irrespecti#e of the fact %hether they relate to current year" past year or future period. It is prepared on cash basis. +#, $imilarly" all payments of %hate#er nature and for %hate#er period are entered on the credit +payments, side. +#i, Receipts and Payments Account is prepared at the end of an accounting period. *he account is closed at the end of the year %ith the closing balance of cash in hand and at bank sho%n on the credit side. +#ii, *he primary ob-ect of preparing this account is to find out the cash position +opening and closing balances of cash in hand and at bank, and to sho% the receipts and payments under different heads for the accounting year. +#iii, Receipts and Payments Account does not re#eal the surplus or deficit for the year because it records all receipts and payments irrespecti#e of their nature +%hether capital or re#enue, and irrespecti#e of their period +pre#ious years" current year or future year,. +i!, Receipts and Payments Account does not contain non.cash items like" depreciation" outstanding e!penses and accrued income. +!, Receipts and Payments Account is not considered a part of the double entry system because it is a summary of the cash book.