receipts and payments account

What is Receipts and Payments Account?

Receipts and Payments Account is a classified summary of Cash book. It is prepared under appropriate heads alongwith cash and bank balances in the beginning and at the end of the accounting period. Receipts appears on the debit side whereas payments appears on credit side of account.

Every type of of receipts and payments are recorded in this account whether capital or revenue. In addition to this, it also records the receipts that relates to whether current, previous or next year. Receipts and Payments account is prepare on the basis of cash basis of accounting. Opening balances in the account shows cash in hand or at the bank at the end of the accounting period.

It is a real account as it deals with the receipts and payments of cash. This account is important as it tells about the cash position of the organisation.

Specimen of Receipts and Payments Account

XYZ Ltd

Receipts and Payments Account

for the year ended 31st March 2018

   Receipts Amount  Payments Amount
To Balance on 1 April 2017 By Salaries
To Subscriptions By Insuarnce
To sale of old newspapers By Purchase of Television
To Entrance Fees By Honoranium
To Donations By purchase of furniture
To Sale of old furniture By Expenses
To Life membership fee By purchase of books
To Cricket Fees By stationery and postage
To Tennis Fees By Balance on 31st March 2018

Features of Receipts and Payments Account

  • Nature – It is a real account and is summary of cash receipts and cash payments.
  • Basis of Recording – This account records the transaction on the cash basis of accounting. This means transactions that are measured in monetary terms are recorded.
  • Capital and Revenue – It records both cash and bank transactions without making any distinction between capital and revenue receipts or capital and revenue payments.
  • Opening and Cash Balances – The opening balance of this account shows cash in hand or at bank at the beginning of the accounting period. On the other hand closing balance shows cash in hand or at the end of the accounting period.
  • Period – It record all the cash and bank transactions no matter whether they belong to current, previous or next year.
  • Adjustments – Adjustments for outstanding expenses, prepaid expenses, accrued or income received in advance. This account do not consider depreciation as it is a non – cash expense.
  • Purpose – The main purpose of creating this account to get a fair idea about the cash position of the organisation.