Receipts and payments account

By: Rashid Javed | Updated on: November 26th, 2019

Definition and explanation

The receipts and payments account summarizes receipts and payments made by a non-trading concern during a particular period of time (usually one year). Its is used to prepare income and expenditure account of non-trading concerns.

The receipts and payments account is prepared from transactions recorded in cash book and can also be termed as a summarized version of cash book of non-trading concerns. The various cash transactions recorded in cash book that can be grouped together are shown under one account head in receipts and payments account.

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Format

The receipts and payments account has a debit side to record all receipts and a credit side to record all payments made by non-trading concerns during the period. The format of this account is shown below:

receipts-and-payments-account-format

Characteristics of receipts and payments account

The important characteristics of a receipts and payments account are given below:

  1. The receipts and payments account usually starts with a beginning cash and bank balance and ends with an ending cash and bank balance.
  2. It records all receipts and payments made by the entity during the period through cash or checks.
  3. The double entry bookkeeping system doesn’t apply to this account, it is just a summary of transactions already recorded in cash book.
  4. It is prepared on the last day of the accounting year of the non-trading concern.
  5. The preparation of receipts and payments account is not necessary however it helps management in pursuance of their various objectives.
  6. Cash transactions of both capital and revenue nature are shown in this account.
  7. Only cash and bank transactions are shown in this account therefore it doesn’t show all the incomes and expenditures incurred by the entity during the period.
  8. It is mainly used for the preparation of income and expenditure account of the entity.

Example

Following is a receipt of payment of account of Zeenat Golf Club – a non-trading concern:

receipts-and-payments-account-example

Click on the next link below to learn how an income and expenditure account is prepared from a receipt and payment account.

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13 Comments on Receipts and payments account
  1. samiran pathak

    write four objectives of preparing a receipts and payment account ??

    1. W Gamage

      1. To ascertain various types of receipts collected in the specific period.
      2. To ascertain various types of expenditure incurred in the specific period.

      1. Adakho

        Please can you explain uses of receipt and payment acc?

  2. balu bc

    in receipt and payment accountant there no DR and CR. ? why

  3. badaru Avinyi lillian

    Why is reciept and payment account used only in non-profitable organisations than goverment departmentals organisations

  4. BENJAMIN A.

    Because its prepared by Not for Profit Making Firms, although its a summery of the firm’s cashbook

  5. Melelua Halauafu

    What is the purpose of Statement of Receipts and Payments?

    1. MATIKO

      Receipts and Payment you prepare only at the end of the year?

  6. Srishti Negi

    What do we get Mtlb what is the balancing amount we get from receipt and payment account of we had our balance bd for cash and bank and balance CD for cash and bank?

  7. Jideoffor

    How can one prepare receipt and payment account

  8. Prakash

    Explain why Receipts and Payments’ account is prepared?

  9. Mary Ackon

    Please how did you work for the cash and bank balance at the credit side

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