Receipts & Payments Account 💰
Definition: It is a summary of the Cash Book for a specific period. It records ALL cash receipts and ALL cash payments, regardless of whether they belong to the current year, previous year, or next year.
Nature: Real Account (Debit what comes in, Credit what goes out).
Features 🌟
- Basis: Cash Basis of Accounting. (Credit transactions are IGNORED).
- Opening Balance: Starts with Opening Cash/Bank Balance.
- Closing Balance: Ends with Closing Cash/Bank Balance.
- Capital vs Revenue: It records BOTH Capital items (Sale of Building) and Revenue items (Subscription received).
- Period: Records everything actually received/paid during the year, even if it relates to other years.
Format 📝
| Receipts (Debit Side) | ₹ | Payments (Credit Side) | ₹ |
|---|---|---|---|
| To Balance b/d (Opening Cash) | 10,000 | By Salaries | 5,000 |
| To Subscriptions (2022, 23, 24) | 50,000 | By Rent | 2,000 |
| To Donations | 5,000 | By Furniture (Asset) | 10,000 |
| To Sale of Old Newspapers | 500 | By Balance c/d (Closing Cash) | 48,500 |
| Total | 65,500 | Total | 65,500 |
Limitation
It tells you the Cash Position, but it does NOT tell you the Surplus or Deficit for the year. For that, we need the Income & Expenditure Account.
Quiz Time! 🎯
Test Your Knowledge
Question 1 of 5
1. Receipts & Payments Account is a:
💡 Final Wisdom: "If cash touched your hand, it goes here. It doesn't care 'why' or 'when' it was due. It only cares that it 'is' here." 💵
Next up: Income & Expenditure Account - The P&L of NPO! 📊