Note on Receipt and Payment Account

  • Note
  • Things to remember

INTRODUCTION TO RECEIPT AND PAYMENT ACCOUNT

Receipt and payment account is the summary of all the cash transaction which is recorded in cash book date wise at end of the year. The organization maintain the accounting system on a cash basis which is recorded in cash book. This cash book is summarized in receipt & payment account. Therefore, receipt & payment account is also known as a summary of cash book.

According to William Pickles, “ Receipt & Payment account is nothing more than a summary of cash book over a certain period, analyzed and classified under suitable headings. It is the form of account most commonly adopted by the treasure of the society, class, association, etc. when preparing the results of the year working."

Features of Receipt & Payment account

The features of receipt & payment account are as follows:

  • It is the summary of the cash book.
  • It is a real account.
  • It records all the cash transaction whether they are capital or revenue.
  • It starts with opening balance of cash and end with closing balance of cash.
  • It does not record non-cash transactions like depreciation, bad debt, loss or profit on a sale of assets, etc.

Limitation of Receipt & Payment account

The limitations of receipt & payment account are as follows:

  • It does not differentiate between capital and revenue receipts and payments.
  • It does not provide an actual financial position of an organization.
  • It ignores accrual system of accounting.

Format of Receipt & Payment account

Receipt & Payment account
For the year ending……….

Receipts

Dr. Amt

Payment

Cr.Amt

To balance b/d
Cash XX
Bank XX
Revenue receipts:
(Including previous year, current year and next year)
To subscription
To Donation (General)
To Rent received
To Interest received
To Entrance fee (not specific)
To Income from lectures
To Government Grant
To Sale of newspaper
To Sale of scraps
To Miscellaneous receipts
Capital Receipts:
To Legacies
To Entrance fee (specific)
To Donation (specific)
To Life membership fee
To Tournament fund
To Prize fun
To Sale of fixed assets
To Interest on fund based item

XXX

XXX



XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX

XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX

Revenue payment:
(Including previous year, current year and next year)
By Printing stationery
By Newspaper
By Repairs
By Audit fee
By Salaries
By Rent
By Municipal taxes
By Charity
By Entertainment expenses
By Insurance
By Honorarium
Capital Payment:
By Land
By Furniture
By Investment
By Sports equipment
By Vehicle
By Building construction
By Balance c/d
Cash XX
Bank XX




XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX

XXX
XXX
XXX
XXX
XXX
XXX
XXX

XXX

XXX

XXX

ILLUSTRATION 1

From the following information prepare a Receipt and Payment a/c of ABC Club for the year ending 31st Dec 2010.

Particulars

Amount (Rs)

Cash in hand (1-1-2010)
Subscription
Donation
Entrance fee
Rent received
Taxes
Salaries
Interest received
Printing & Stationery

1000
2000
1500
500
1000
500
3500
800
1200


Solution:

Receipts and Payment a/c
For the year ending on 31stdec, 2010.

Receipts

Dr. amt

Payment

Cr. Amt

To balance b/d
To Subscription
To Donation
To Entrance fee
To Rent received
To Interest received

1000
2000
1500
500
1000
800

By Taxes
By Salaries
By Printing & stationery
By balance c/d

500
3500
1200
1600

6800

6800




References:

Sharma, Narendra et.al., Principles of Accounting-XI, Bundipuran Prakashan, Kathmandu

Koirala, Yadav Raj et.al., Principles of Accounting-XI, Asmita Books Publication, Kathmandu

Shrestha, Dasharaha et.al., Accountancy-XI, M.K. Prakashan, Kathmandu

Features of Receipt & Payment account

  • It is the summary of cash book.
  • It is a real account.
  • It records all the cash transaction whether they are capital or revenue.
  • It starts with opening balance of cash and end with closing balance of cash.
  • It does not record non-cash transactions like depreciation, bad debt, loss or profit on sale of assets etc.

Limitation of Receipt & Payment account

  • It does not differentiate between capital and revenue receipts and payments.
  • It does not provide actual financial position of an organization.
  • It ignores accrual system of accounting.
.

Very Short Questions

0%

DISCUSSIONS ABOUT THIS NOTE

No discussion on this note yet. Be first to comment on this note