Receipts and payments account


receipts and payments account is a summary of actual cash receipts and payments extracted from the cash book over a certain period. All cash received and paid during the period whether capital or revenue is included in this account. The receipts are entered on the debit side, that in on the same side as that on which they appear in the cash book.


All the receipts are grouped under main headings such as entrance fees, annual subscription, life membership subscription, donations, interest and sundry receipts. All the payments are entered on the credit side, under main headings such as Salaries and Wages, Printing and Stationary, Rent, Rates and Taxes, Office expenses etc.

The receipts and payments account commences with the opening balance of cash and similarly closes with the balance of cash at the end of the period. As it is a mere summary of cash transactions, it does not include any income or expenditure outstanding and naturally fails to reveal the actual income or expenditure of the period it covers.

Format/Specimen Of Receipts And Payments Account

In receipts and payment account there is a receipts column on the debit side which is used to record all receipts and a payment column on credit side which is used to record all payments made by a non-trading concern or non-profit-making organizations during a specific accounting period (usually one year). Below is the format/specimen of receipts and payments account.

Features Of Receipts And Payments Account

The main features of the receipts and payments account are as follows:

  • It is a summarized form of Cash Book.
  • It starts with opening Cash and Bank balance (sometimes they are merged) and ends with their closing balances.
  • All receipts are recorded on its left-hand (Debit) side and all payments are recorded on its right-hand (credit) side.
  • Receipts and payments of both capital and revenue nature are recorded in it.
  • It includes all cash and bank receipts and payments during the current year, whether they are related to current, past or future accounting periods.
  • Transactions related to cash and bank only are recorded in it.
  • It excludes all non-cash items.
  • This account is not a part of the double entry system.
  • It is a duplicate of the cash book.
  • It shows cash positions only, not surplus or deficit for the period.
  • It generally shows debit balance.
  • In case of Bank overdraft, its bank balance will be credit.
  • It may also show nil balance, but it is rare.
  • It is prepared at the end of an accounting period.

Advantages Of Receipts And Payments Account

Following are the advantages of Receipts and Payments Account.

  1. Total, receipts and total payments under different heads can be seen at a glance.
  2. Verification of Cash Book can be done with it.
  3. It provides classified records of different heads of receipts and payments.
  4. It provides ready-made data for the preparation of Income and Expenditure Account

Preparation Of Receipts And Payments Account

Receipts and Payments Account is prepared by extracting the receipts and payments from the cash book of the whole year. In cash book, each item has been recorded separately in chronological order. But Receipts and Payments Account items are recorded in classified form under different heads. The following steps may be followed to prepare Receipts and payments Accounts.

Step 1: Write the title of Receipts and Payments Account and draw the format as shown is in the specimen.
Step 2: Write the opening balances of cash and bank at the top, on the left-hand side
Step 3: Add up all receipts of different dates under the same head.
Step 4: Add up all the payments, made on different dates under the -same head. (A Separate sheet may be used for this purpose.)
Step 5: Write the totals of each head of receipts on left-hand side and total of each head of payments on the right-hand side.
Step 6: Deduct all payments from all receipts and find the closing balance.

Example of Receipts and Payments is given below.