Receipt And Payment Account
Explanation, Features & Receipts And Payment Account Format

What is receipts and payment account & how to prepare receipt and payment account ?

Receipt And Payment Account
Explanation :

The Not for profit concerns works for social benefits. They collects the funds by the way of Subscriptions from members, Donations from public , Government grant etc. Therefore the members , public , government etc. wants to know whether the funds supplied by them to the organisation, are properly used for the social benefit. Therefore such organisations have to show the utilisation of funds by preparing a statement called as a Receipts And Payment Account .

Receipts and payments account is a summary of cash receipts and payments for the particular financial year. It discloses from which sources the funds are collected and for what purposes these funds are utilised.

The receipts and payments account has two sides given below :

1. Receipts side
2. Payments side.

Receipt And Payment Account Features :

1. It is a real account.
2. It records cash received and paid in the current year, belonging to any year. It means that cash received / paid during the current year for next year or for previous year or for current year is recorded in the Receipts And Payments Account .
3. It contains Revenue items as well as capital nature items.
4. Credit transactions are not recorded in it.
5. It includes cas as well as banking transactions.
6. It starts with opening cash bank balance on the debit side.
7. It ends with closing cash / bank balance on the credit side.
8. Non cash items are not recorded in receipts and payments account .