What is Receipt and Payment Account?
Receipt and payment account is an abridged cash book for a furnished period of time. This is a synopsis of the transactions in the form of cash in cash book. This account is prepared on the foundation of the data obtainable from the cash book. NPOs develop R and P account during the year-end. This account is structured in such a way that, it cannot reveal the authentic outcome of an NPO. With the assistance of this particular account and extra data, we can construct Expenditure and Income account to reveal the authentic outcomes of NPOs.
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Features of Receipt and Payment Account
Below mentioned are the characteristic features of R and P account:
- This Account is a synopsis of cash book
- The cash receipts for the year are documented on its debit side (Dr). And, the payments made in cash for the year are recorded on the credit side (Cr)
- Usually, R and P Account depicts debit balance. If there is overdraft balance, its net balance might be credit
- We document only cash transactions in this account
- We incorporate receipts and payments in cash, they are of revenue and capital nature
- Non-cash items such as outstanding expenses, depreciation, accumulated incomes are shown in this account
- It’s closing balance depicts closing cash in hand and closing cash at the bank
The above mentioned is the concept that is explained in detail about Receipt and Payment Account for the class 12 students. To know more, stay tuned to BYJU’S.