Receipts and Payments Accounts
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Receipts and Payments Accounts

Receipts and payments Account Meaning : Receipts and Payments Account is a summary of cash transactions appearing in the Cash Book. It is prepared at the end of the year from the Cash Receipts Journal and Cash Payments Journal. All the receipts and payments during an accounting period are included in it under suitable headings. For example, subscriptions received from members on different dates appear in the cash book but the total subscriptions received during the year appear in the Receipts and Payments Account. Similarly, salaries and wages paid on different dates are recorded in detail in the cashbook but the total salaries and wages paid during the year appear in the Receipts and Payments Account.

Receipts and payments Account

Meaning : Receipts and Payments Account is a summary of cash transactions appearing in the Cash Book. It is prepared at the end of the year from the Cash Receipts Journal and Cash Payments Journal. All the receipts and payments during an accounting period are included in it under suitable headings. For example, subscriptions received from members on different dates appear in the cash book but the total subscriptions received during the year appear in the Receipts and Payments Account. Similarly, salaries and wages paid on different dates are recorded in detail in the cashbook but the total salaries and wages paid during the year appear in the Receipts and Payments Account. In the words of William Pickles, "Receipts and Payment Account is nothing more than a summary of the Cash Book over a certain period, analyzed and classified under suitable headings. It is the form of account most commonly adopted by the treasures of societies, clubs, associations, etc., when preparing the results of the year's working."

The main features of Receipts and Payments Account are as follows :

(i) The account is a summary of the cashbook combining cash and bank transactions,

(ii) The account begins with the opening balance of cash in hand and at bank. Cash in hand is written on the debit side because it always shows a debit balance. Cash at bank (debit balance) is written on the debit side, but overdraft (credit balance) is written on the credit side.

(iii) Receipts and Payments Account is a real account. Therefore, the rule of real account (debit what comes in and credit what goes out) is followed while preparing it.

(iv) All cash receipts, both of revenue and capital nature, are shown on the debit (receipts) side, irrespective of the fact whether they relate to current year, past year or future period. It is prepared on cash basis.

(v) Similarly, all payments of whatever nature and for whatever period are entered on the credit (payments) side.

(vi) Receipts and Payments Account is prepared at the end of an accounting period. The account is closed at the end of the year with the closing balance of cash in hand and at bank shown on the credit side.

(vii) The primary object of preparing this account is to find out the cash position (opening and closing balances of cash in hand and at bank) and to show the receipts and payments under different heads for the accounting year.

(viii) Receipts and Payments Account does not reveal the surplus or deficit for the year because it records all receipts and payments irrespective of their nature (whether capital or revenue) and irrespective of their period (previous years, current year or future year).

(ix) Receipts and Payments Account does not contain non-cash items like, depreciation, outstanding expenses and accrued income.

(x) Receipts and Payments Account is not considered a part of the double entry system because it is a summary of the cash book.

 

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Comments (1)
Imran

i have done bachelors in commerce and doing accounting jobs since last 7 years. and wants to learn more about accounts maintaining

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