Receipt and Payment Account: Characteristics, Preparation, Examples etc

The compilation of these Accounting for Not-for-Profit Organisations Notes makes students exam preparation simpler and organised.

Receipt and Payment Account

“A receipt and payment account is a summarized cash book for a given period”. “This is a summary of the cash transactions as in the cash book”. Non-profit organizations prepare receipt and payment account at the end of the year. With the help of this account and some additional information, we prepare an income and expenditure account to disclose the true results of non-profit organizations.

Receipt and Payment Account

The receipt and payment account cannot disclose the true result of a non-profit organization. We prepare this account on the basis of the information available from the cash book.

Characteristics of Receipt and Payment Account
Following are the characteristics of receipt and payment account:

  1. It is a summary of the cash book.
  2. We record all the cash receipts during the whole year on its debit side. Whereas, we write all the cash payments for the whole year on its credit side.
  3. We include both receipts and payments in cash whether they are of capital and revenue nature.
  4. We record only cash transactions in receipt and payment accounts.
  5. It generally shows a debit balance. In the case of overdraft balance, its net balance may be credit.
  6. Its closing balance shows closing cash in hand and closing cash at the bank.
  7. Non-cash items such as depreciation, outstanding expenses, accrued incomes are also shown in this account.

Method of Preparation
As we know, we prepare Receipts and payment account with all the cash receipts and cash payments for the whole year. We determine the net result of cash receipts and cash payments of a fixed time through this account.

The left-hand side of this account is known as “Receipts” and the right-hand side of this account is known as “Payments”. All cash receipts are recorded on the left-hand side, while all cash payments are recorded on the right-hand side and are arranged in a classified form.

1. We start with taking opening balances of cash in hand and cash at the bank and enter them on the debit side. (if there is bank overdraft at the beginning, we enter the same on the credit side).

2. Now, we enter the total amounts of all receipts on the debit side and the total amount of all payments on the credit side (whether capital or revenue), and whether they are of past, current, and future periods.

3. We do not include the incomes or expenses that do not involve the inflow or outflow of cash.

4. Now, we will find the difference between the total of the debit side and the total of the credit side of the account, the amount so found will be the closing balance of cash or bank.

In case, if the credit side is more than the debit side, the amount will be debited as bank overdraft and we will close the account.

Proforma of Receipt and Payment Account

Receipt and Payment Account 1

Receipt and Payment Account 2


From the following particulars related to Arman Point, prepare a Receipt and Payment account for the year ending 31st March 2018.
Receipt and Payment Account 3
In the books of Arman Point
Receipt and Payment Account 4