CBSE Class 12-commerce Answered

Receipt and Payment account gives the summarised picture of various receipts and payents irrespective of whether they pertain to current period, previous period or succcceeding period. Explain with example?

Asked by ravimundrakd | 29 Mar, 2020, 10:59: PM

Expert Answer

Understanding Receipts and Payments Account:

Meaning: It is an account that shows the summary of all cash and bank transactions occurred during an accounting period. It starts with the opening balances of cash and bank and ends with the closing balances of cash and bank. This account is a Real Account and lays the basis for the preparation of Income and Expenditure Account and the Balance Sheet.

Features: Following are the features of Receipts and Payments Account:

Nature: It is a summary of cash receipts and payments and hence, it an Asset Account/Real Account
Recording: It provides the summary of all cash and bank transactions in a chronological order.
Basis of Preparing: It is prepared on cash basis, i.e., it records only cash inflow and outflow. Accrued and outstanding transactions are not recorded in this account.
Capital and Revenue: It records all the transactions whether capital or revenue.
Period: It records all the cash and bank transactions irrespective of whether they relate to current, previous or succeeding accounting periods.
Opening and Closing Balances: Opening balance of this account is the cash in hand/ bank at the beginning of the accounting year and the closing balance shows cash in hand/bank at the end of the accounting period.
Adjustment: Adjustments for accrued, outstanding items and depreciation is not required to be made in this account.
Purpose: The purpose of preparing this account is to show amount received and paid under various heads during the accounting year and also to know the cash position of the entity.

Format:

Dr. Receipts and Payments Account for the year ended … Cr

Receipts

Amount

Payments

Amount

To Balance b/d(Opening Balance):

Cash in Hand

Cash at Banks

To Subscriptions:

For Previous Year …

For Current Year …

For Next Year …

To General Donations

To Entrance/Admission Fees

To General Grants

To Sale of Newspaper, Grass, etc.

To Sale of Old Used Sports Materials

To Interest on Investments

To Income from Concerts/Lectures

To Dividends

To Rent Received

To Interest Received

To Miscellaneous Receipts

To Life Membership Fees

To Subscriptions for Specific Purpose

To Donation for Specific Purpose

To Legacies

To Endowment Fund

To Sale of Fixed Assets

To Receipts on Account of Special Fund, i.e., Match Fund, Prize Fund, etc.

To Balance c/d (Bank Overdraft)*

…

By Balance b/d (Opening Balance)(in case of Bank Overdraft)

By Salaries

By Rent

By Postage Expenses

By Newspapers and Magazines, etc.

By Repairs

By Audit Fee

By Maintenance Expenses

By Insurance

By Secretary’s Honorarium

By Honorarium

By Municipal Tax

By Prize Distributed

By Office Expenses

By Expenses on Show

By Miscellaneous Payments

By Purchase of Fixed Assets (e.g., Furniture)

By Sports Equipment

By Investments

By Books

By Loan (Repayment)

By Building

By Balance c/d (Closing Balance):

Cash in Hand

Cash at Bank*

…

*Either of the two will appear.

# If the receipts side is more than the payments side then, Closing balance of cash and bank will appear on the credit side of this account.

If the payments side is more than the receipts side then, Closing balance of bank will appear (as Bank overdraft) on the debit side of this account.

Answered by Surabhi Gawade | 30 Mar, 2020, 02:24: PM