Receipts and Payments Account

The Receipts and Payments Account is a classified summary of the cash book of a not-for-profit organization for the accounting year, prepared at the end of the year by grouping and totalling all cash and bank receipts and payments recorded during the year.

Features

• It is essentially a Real Account — it begins with the opening balance of cash and bank and ends with the closing balance of cash and bank.
• It records all cash and bank transactions of the year, whether they relate to the current year, the previous year, or the next year — for example, subscription received in advance for next year is still recorded, while outstanding subscription of the current year (not yet received) is not.
• It records receipts and payments of both a revenue nature (subscription, rent received, salaries paid) and a capital nature (donation for a building, purchase of investments, sale of a fixed asset) — it does not distinguish between the two.
• It does not record non-cash items such as depreciation, or an item for which no cash has moved, such as an outstanding expense.
• Being only a summary of cash transactions, it does not disclose the surplus or deficit of the organization for the year — that is the purpose of the Income and Expenditure Account.

Format