Receipt and Payment Account Format

Receipt & Payment A/c format is prepared similarly to how a Cash Book is prepared. It is also a real account that records cash transactions and events of a Not for Profit Organisation. It is a classified summary of Cash Book maintained on cash basis of accounting categorising receipts and payments under appropriate heads of accounts. Receipt & Payment A/c records receipts and payments, which are settled in cash of both capital and revenue nature or whether it relates to the current year, previous year or next year. It is prepared for a specific period, and it is not based on accrual system of accounting, i.e. does not include expenses or income on accrual basis.

All the receipts are written on the debit side and all the payments made are written on the credit side of the account. The opening balances of this account show Cash in Hand and Cash at Bank at the beginning of the accounting period, and the closing balances of this account show Cash in Hand and Cash at Bank at the end of the accounting period. Receipt and Payment A/c fairly depicts the cash position of the organisation. 

Format of Receipt and Payment A/c:

* represents that the Receipt and Payment A/c will either have a positive or negative balance of Cash at Bank, i.e., when the credit side is greater than the debit side, the difference is denoted as a positive balance of Cash at Bank, and when the debit side is more than the credit side, the difference is denoted as Bank Overdraft or negative balance of Cash at Bank.

Steps in the Preparation of Receipt and Payment Account:

Step 1: Opening balances of the cash at bank and cash in hand is written on the receipt side, i.e. credit side of this account. In case, there is bank overdraft at the beginning of the year, then it is written on the payment side, i.e. credit side of this account to start with.

Step 2: All the transactions and events related to cash or bank which are received, i.e. receipts received in favour of the organisation is written on the debit side of this account irrespective of capital or revenue nature.

Step 3: All the transactions and events related to cash or bank payments made by the organisation is written on the credit side of this account irrespective of capital or revenue nature. 

Step 4: No accrued incomes or outstanding expenses are considered in this account, as they don’t generate any inflow or outflow of cash. 

Step 5: Now, both sides are compared, and the difference arises thereon is written as the closing balance of cash in hand and cash at bank on the credit side, i.e. payment side of this account.