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Receipts and Payments Accounting

Receipts and payments accounting means to record all cash and bank receipts and payments. We can maintain receipts and payments accounting by making receipts and payments account. It is prepared in non profit organisation. Its format is just like cash book of business. In debit side, we show all cash and bank receipts and in the credit side, we show all cash and bank payments.




Steps to Prepare Receipt and Payment Account :-

1st Step : To open Receipt and Payment Account

It starts by showing the opening balance of cash and bank in its debit side.

2nd Step : To Record the Transactions

We record only cash and bank related transactions in it.

 a) Debit side 

In the debit side, we record only all the incomes and receipts which is in the cash and bank form. For example, we have give temple space on rent and we get money. This will show in the debit side of receipt and payment account. We will not show donation in kind. For example, we get the clothes for poor children. Its value will not show in the debit side of receipt and payment account.

 b) Credit Side

 In the credit side, we record only all the all expenses and payments which is in the cash and bank form. For example, we have take office on rent and we give money. This will show in the credit side of receipt and payment account. We will not show any outstanding expense in it. For example, we have to given salaries to our employees but still end of year we did not pay. This is outstanding expense but we will show in receipt and payment account.

 3rd Step : Recording of Transfer to or From Bank.

 If any cash is transferred to bank or withdraw from bank, it is not recorded in receipt and payment account because we use only one column both cash and bank receipt and payment. If we are interested to make bank reconciliation statement. We have to make a bank account which will record all bank related transactions only.

4th Step : Closing of Receipt and Payment Account 

We take the difference of debit and credit side of this account. If debit side is more than credit side, we show the closing balance in the credit side. But it is the closing debit balance and it is shown as current asset in the balance sheet.

Important : You must include both capital and revenue nature items in it. In following screenshot, you are seeing that we have added both furniture payment and salaries and wages. buying of furniture with cash is our capital expenditure. Payment of salaries and wages are our revenue expenditures. We will include both type of payments because we have to maintain the accounts of cash and bank. We are interested that we had 1240 in the beginning of time but when we have seen our pocket at the end of year we have Rs. 915. What was happened in the year to bring difference in our pocket money. So, we have seen our each and every bill and started to record all the money which we receive through cash and bank. We also recorded all the payments which we have done through cash and through bank. Now, when we calculated our closing balance of this account, we are happy that our pocket money is matching with this account's closing balance.


Related : How to Prepare Income and Expenditure Account


COMMENTS

: 3
  1. which side we should show subscription in receipts side or payments side
    if they give in question subscriptions received then we should show it in receipt side if they give only subscription thn which side we show it receipts or payments side

    ReplyDelete
  2. extensio to club house is it expense or?

    ReplyDelete
  3. Which side show subscription include

    ReplyDelete
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Accounting Education: Receipts and Payments Accounting
Receipts and Payments Accounting
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