Receipt and Payment Account:
Define and explain receipt and payment account.
Why a receipt and payment account is prepared?
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 with the cash in hand at the commencement and ends with that at the close of the year. Similarly to cash account, in receipts and payments account receipts are shown on the debit side while payments are shown on the credit side, without any distinction between capital and revenue. Moreover, it does not include an unpaid expenditure not any unrealized income relating to the period under review and so fails to reveal the financial position on the concern.
Format of Receipt and Payment Account:
Receipt and Payment Account
|To Balance b/d
To Annual subscription
To Life membership fees
To Entrance fees
To interest on securities
To sundry receipts
|By general expenses
By salaries and wages
By rent, rates & taxes
By printing & stationary
By Balance c/d
You may also be interested in other articles form “accounting from non-trading concerns” chapter:
- Final Accounts of Non-Trading Concerns
- Receipt and Payment Account
- Income and expenditure account
- Difference Between Receipts and Payments and Income and Expenditures Account