Receipts and Payments Account
The receipt and payment account is a real account which shows the classified summary of transactions of Cash Book along with the Cash and Bank balances in the beginning and at the end of an accounting period.
Features of Receipts and Payments Account:
- It starts with the opening balance of cash in hand and cash at bank.
- It is debited with all cash received.
- It is credited with all cash paid out.
- It records all receipts and payments whether they are of capital nature or revenue nature.
- It records all the receipts and payments whether they relate to previous, current, or next year.
- It does no record non cash items like outstanding expenses and depreciation.
- It ends with the closing balance of Cash in hand and Cash at bank.
- This account does not show the amount of profit and loss for the period.
The closing balance of Receipts and Payments Account does not mean that income for the year has exceeded the expenditure by an amount equal to balance in hand.