Receipts and payments account


A receipts and payments account is a summary of actual cash receipts and payments extracted from the cash book over a certain period. All cash received and paid during the period whether capital or revenue is included in this account. The receipts are entered on the debit side, that in on the same side as that on which théy appear in the cash book.


All the receipts are grouped under main headings such as entrance fees, annual subscription, life membership subscription, donations, interest and sundry receipts. All the payments are entered on the credit side, under main headings such as Salaries and Wages, Printing and Stationary, Rent, Rates and Taxes, Office expenses etc.

The receipts and payments account commences with the opening balance of cash and similarly closes with the balance of cash at the end of the period. As it is a mere summary of cash transactions, it does not include any income or expenditure outstanding and naturally fails to reveal the actual income or expenditure of the period it covers.

Format/Specimen of receipts and payments account

In receipts and payment account there is a receipts column on the debit side which is used to record all receipts and a payment column on credit side which is used to record all payments made by a non-trading concern or non-profit-making organizations during a specific accounting period (usually one year). Below is the format/specimen of receipts and payments account.

format of receipts-and-payments-account

Features of receipts and payments account

The main features of the receipts and payments account are as follows:

  • It is a summarized form of Cash Book.
  • It starts with opening Cash and Bank balance (sometimes they are merged) and ends with their closing balances.
  • All receipts are recorded on its left-hand (Debit) side and all payments are recorded on its right-hand (credit) side.
  • Receipts and payments of both capital and revenue nature are recorded in it.
  • It includes all cash and bank receipts and payments during the current year, whether they are related to current, past or future accounting periods.
  • Transactions related to cash and bank only are recorded in it.
  • It excludes all non-cash items.
  • This account is not a part of the double entry system.
  • It is a duplicate of the cash book.
  • It shows cash positions only, not surplus or deficit for the period.
  • It generally shows debit balance.
  • In case of Bank overdraft, its bank balance will be credit.
  • It may also show nil balance, but it is rare.
  • It is prepared at the end of an accounting period.

Advantages of Receipts and Payments Account

Following are the advantages of Receipts and Payments Account.

  1. Total, receipts and total payments under different heads can be seen at a glance.
  2. Verification of Cash Book can be done with it.
  3. It provides classified records of different heads of receipts and payments.
  4. It provides ready-made data for the preparation of Income and Expenditure Account

Preparation of receipts and payments account

Receipts and Payments Account is prepared by extracting the receipts and payments from the cash book of the whole year. In cash book, each item has been recorded separately in chronological order. But Receipts and Payments Account items are recorded in classified form under different heads. The following steps may be followed to prepare Receipts and payments Accounts.

Step 1: Write the title of Receipts and Payments Account and draw the format as shown is in the specimen.
Step 2: Write the opening balances of cash and bank at the top, on the left-hand side
Step 3: Add up all receipts of different dates under the same head.
Step 4: Add up all the payments, made on different dates under the -same head. (A Separate sheet may be used for this purpose.)
Step 5: Write the totals of each head of receipts on left-hand side and total of each head of payments on the right-hand side.
Step 6: Deduct all payments from all receipts and find the closing balance.

Example 1:

A library and debating society was formed on 1st January 2017. Following are the receipts and payments during the year ended 31 December 2017.

Receipts: Subscription $1350, Donations $2600, Entrance fee $480 Lockers rent $785.

Payments: Library books $1210, rent of Library Hall $240, Office expenses $35, Postage and Stationary $72, Furniture purchased $934 Investment $1100.

Required: Show the receipts and payments account for the years ended 31 December 2017.


Receipt and payment account non trading concerns

Example 2:

The cash transactions of the Beach Club have been given below:
Cash at the commencement of the year: $4,500.00
Entrance fees received: $18,300.00
Life membership subscription received: $2,605.00
Lockers rent received: $465.00
Received during the year: $3,500.00
‘Arreärs of the last year: $2,360.00
This year advance: $346.00
Printing and Stationary:
Paid during the year: $2,160.00
Payable .this year: $94.00
Payable last year: $312.00
Rent and Rates:
Paid during the year: $370.00
Payable this year: $230.00
Sports material purchased: $348.00
Required: A receipt and payment account for the year ended on 30 June 2017.


Receipt and payment account non trading concerns example

Explanatory note:
Adjustments regarding subscription, arrears of the last year, this year advance, printing and stationery payable this year, payable last year and rent and rates payable this year have not been recorded in receipts and payments account because these items do not affect receipt and payment of cash

12 thoughts on “Receipts and payments account”

  1. A detailed description of the receipts and payment account as well as examples given regarding the account has really helped me improve my knowledge regarding the receipts and payment account n hence I’m very grateful..

  2. My is question is supposing an amount say 2,000,000 was used to buy govt. treasury bills within the year. Can I include it as part of payments in receipts and payments. Secondly, will that same amount, 2,000,000 be part of my closing balance since it is still my money.
    Looking forward to your response.

  3. Can I record an amount say, 2,000,000 used to purchase an investment within the year under payments in receipts and payments account. Can that same 2,000,000 be included in my closing balances since that amount was invested but not expend?


Leave a Comment