Receipt And Payment 5a5o57

Receipt and Payment : Learning Objectives: 1. Define and explain receipt and payment . 2. Why a receipt and payment is prepared? 3. Prepare a receipt and payment . Definition and Explanation: Receipt and payment is a mere summary of cash book for a year. It begins with the cash in hand at the commencement and ends with that at the close of the year. Similarly to cash , in receipts and payments receipts are shown on the debit side while payments are shown on the credit side, without any distinction between capital and revenue. Moreover, it does not include an unpaid expenditure not any unrealized income relating to the period under review and so fails to reveal the financial position on the concern. Format of Receipt and Payment : Receipts

$

Payments

$

Example: Receipt and Payment Receipts $ To Balance b/d1,240 To Annual subscription1,630 To Life hip fees250 To Entrance fees240 To interest on securities180 To sundry receipts 50 3,590

Payments $ By general expenses550 By salaries and wages550 By furniture800 By rent, rates & taxes500 By printing & stationary125 By Repairs150 By Balance c/d 915 3,590

Definition noun an ing method in which receipts and payments are ed for when the money is actually received or paid out, not necessarily when they are entered in the books. A summary of receipts and payments in a given period/year. This is the simplest form of s. It does not reflect the true financial position of the organisation since it is only a record of the money flow. An income and expenditure is a more accurate indicator. Receipts and Payments s Receipts and payments Meaning : Receipts and Payments is a summary of cash transactions appearing in the Cash Book. It is prepared at the end of the year from the Cash Receipts Journal and Cash Payments Journal. All the receipts and payments during an ing period are included in it under suitable headings. For example, subscriptions received from on different dates appear in the cash book but the total subscriptions received during the year appear in the Receipts and Payments . Similarly, salaries and wages paid on different dates are recorded in detail in the cashbook but the total salaries and wages paid during the year appear in the Receipts and Payments . Receipts and payments Meaning : Receipts and Payments is a summary of cash transactions appearing in the Cash Book. It is prepared at the end of the year from the Cash Receipts Journal and Cash Payments Journal. All the receipts and payments during an ing period are included in it under suitable headings. For example, subscriptions received from on different dates appear in the cash book but the total subscriptions received during the year appear in the Receipts and Payments . Similarly, salaries and wages paid on different dates are recorded in detail in the cashbook but the total salaries and wages paid during the year appear in the Receipts and Payments . In the words of William Pickles, "Receipts and Payment is nothing more than a summary of the Cash Book over a certain period, analyzed and classified under suitable headings. It is the form of most commonly adopted by the treasures of societies, clubs, associations, etc., when preparing the results of the year's working." The main features of Receipts and Payments are as follows : (i) The is a summary of the cashbook combining cash and bank transactions, (ii) The begins with the opening balance of cash in hand and at bank. Cash in hand is written on the debit side because it always shows a debit balance. Cash at bank (debit balance) is written on the debit side, but overdraft (credit balance) is written on the credit side.

(iii) Receipts and Payments is a real . Therefore, the rule of real (debit what comes in and credit what goes out) is followed while preparing it. (iv) All cash receipts, both of revenue and capital nature, are shown on the debit (receipts) side, irrespective of the fact whether they relate to current year, past year or future period. It is prepared on cash basis. (v) Similarly, all payments of whatever nature and for whatever period are entered on the credit (payments) side. (vi) Receipts and Payments is prepared at the end of an ing period. The is closed at the end of the year with the closing balance of cash in hand and at bank shown on the credit side. (vii) The primary object of preparing this is to find out the cash position (opening and closing balances of cash in hand and at bank) and to show the receipts and payments under different heads for the ing year. (viii) Receipts and Payments does not reveal the surplus or deficit for the year because it records all receipts and payments irrespective of their nature (whether capital or revenue) and irrespective of their period (previous years, current year or future year). (ix) Receipts and Payments does not contain non-cash items like, depreciation, outstanding expenses and accrued income. (x) Receipts and Payments is not considered a part of the double entry system because it is a summary of the cash book.