— Kishore V, SME and ACW at Edumarz
Receipt and Payment Account:
- The Account of Receipts and Payments is a summary of the cash book.
- It’s made up of cash and bank transactions that have been documented in the Cash Book.
- On the receipts side, all cash receipts are documented (i.e. Debit side) of the Receipts and Payments Account, and all cash payments are recorded on the payments side (i.e. Credit side).
- It starts with the cash and bank opening balances and finishes with the cash and bank closing balances (balancing number) at the conclusion of the accounting period.
- It keeps track of all capital and revenue, cash and bank transactions.
- It not only records cash and bank transactions for the current accounting period but also cash and bank receipts (or payments) for the previous or future accounting period received within the current accounting period.
Basis | Income and Expenditure | Receipts and Payments |
Nature | It’s similar to a profit and loss statement | It is the cash summary. |
Nature of item | It just keeps track of revenue receipts and expenditures. | It keeps track of income receipts and payments, as well as capital. |
Period | The income and expense accounts are only for the current period. | Receipts and payment accounts can be linked to previous and subsequent periods. |
Debit side | This account’s debit side keeps track of costs and losses. | The receipts are recorded on the debit side of this account. |
Credit Side | The revenue and profits are recorded on the credit side of this account. | This account’s Credit side keeps track of payments. |
Depreciation | Depreciation is included. | Depreciation is not included. |
Opening Balance | There is no opening balance. | In the beginning, balancing represented cash on hand, cash in the bank, or an overdraft |
Closing Balance | The surplus or deficit of revenue overspending, and vice versa, is represented by the balance at the end. | The final balance reflects cash on hand, cash in the bank, or bank overdraft. |