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Question
Explain the statement: “Receipt and Payment Account is a summarised version of Cash Book”.
Solution
Receipts and Payments Account is a summary of the Cash Book. This account is prepared by those organisations which maintain their books on cash basis. All cash receipts are recorded on the Receipts side (i.e. Debit side) and all cash payments are recorded on the Payments side (i.e. Credit side) of Receipts and Payments Account. It is prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balance of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the accounting period. It records all the cash and bank transactions both of capital and revenue nature. It not only records the cash and bank transactions relating to the current accounting period, but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period. This account only helps us to ascertain the closing balance of the cash and bank and helps in assessing the cash position of an NPO. It also forms the basis for the preparation of Income and Expenditure Account.
Similarities between Receipt and Payments Account and Cash Book
The following are the features of Receipt and Payment Account that are common to those of Cash Book:
1. Nature: It is a summarised version of the Cash Book. Similar to the Cash Book, the Receipt and Payment Account is also a Real Account.
2. Nature of Transactions: It records only cash and bank transactions similar to a Two-Column Cash Book. Transactions other than cash and bank like depreciation, loss/ profit on sale of assets, etc. are not recorded in this account.
3. No distinction between Capital and Revenue items: It records all the cash and bank receipts and payments of both capital and revenue nature. Likewise, the transactions recorded in the Cash Book are also of both capital and revenue nature.
4. Opening and closing balance: It begins with the opening balance of cash and bank and ends with the closing balance of the cash and bank (balancing figure) at the end of the accounting period.
5. Purpose: It reveals the cash position of an organisation. It helps to ascertain the total amount paid and received during an accounting period. Similarly, a Cash Book also helps us to assess the cash position of an organisation.
Thus, on the basis of the above mentioned points and similarities, the statement 'Receipt and Payment Account is a summarised version of Cash Book' is justified.
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RELATED QUESTIONS
What is Receipt and Payment Account? How is it different from Income and Expenditure Account?
The Receipt and Payment Account of Harimohan charitable institution is given:
Receipt and Payment Account for the year ending March 31, 2015
| Receipts | Amount (Rs) | Payments | Amount (Rs) |
| Balance b/d: | Furniture | 3000 | |
| Cash at Bank | 22000 | Investments | 55000 |
| Cash in Hand | 8800 | Advance for building | 20,000 |
| Donations | 16000 | Charities | 60000 |
| Subscriptions | 50200 | Salaries | 10400 |
| Endowment Fund | 60000 | Rent and Taxes | 4000 |
| Legacies | 12000 | Printing | 1000 |
| Interest on Investment | 3800 | Postage | 300 |
| Interest on Deposits | 800 | Advertisements | 1100 |
| Sale of old newspapers | 500 | Insurance | 4800 |
| Donation for building | 16000 | Balance c/d: | |
| Legacy for building | 12000 | Cash at Bank | 32000 |
| Cash in Hand | 10500 | ||
| 202100 | 202100 |
Prepare the Income and Expenditure Account for the Year ended on March 31, 2015 after considering the following:
- Liabilities to be provided for are:
Rent Rs 800; Salaries Rs 1,200; advertisement Rs 200. - Rs 2,000 due for interest on investment was not actually received.
From the following Receipt and Payment Account prepare final accounts of a Unity Club for the year ended March 31, 2017.
| Receipt and Payment Accounts for the year ending March 31, 2017 | ||||
| Receipts | Amount (Rs) | Payments | Amount (Rs) | |
| Balance b/d |
15,000 |
Furniture | 18,000 | |
| Sale of Old furniture (costing Rs 6,000) | 4,000 | Library books | 10,000 | |
| Subscriptions: | Salaries | 72,000 | ||
| 2015–16 | 18,000 | General expenses | 18,000 | |
| 2016–17 | 60,000 | Electric charges | 12,000 | |
| 2017–18 | 12,000 | 90,000 | Newspapers | 33,800 |
| Sale of old newspapers | 10800 | Postage | 3,000 | |
| Profit from entertainment |
44,000 |
Stationery | 40,000 | |
| Rent | 84000 | Audit fee | 8,000 | |
| Balance c/d | 33,000 | |||
| 2,47,800 | 2,47,800 | |||
| Balance Sheet as on March 31, 2016 | |||
| Liabilities | Amount (Rs) | Assets | Amount (Rs) |
| Outstanding Salary | 6,000 | Cash | 15,000 |
| Capital Fund | 6,94,000 | Outstanding subscription | 18,000 |
| Library Books | 30,000 | ||
| Furniture | 37,000 | ||
| Land and Building | 6,00,000 | ||
| 7,00,000 | 7,00,000 | ||
Additional Information:
1. The club has 500 members each paying an annual subscription of Rs 150.
2. On 31.3.2016 salaries outstanding amounted to Rs 1200 and salaries paid included Rs. 6000 for the year 2015 - 16
3. Provide 5% depreciation on land and building.
Receipt and Payment Account of Maitrey Sports Club showed that Rs 68,500 were received by way of subscriptions for the year ended on March 31, 2017.
The additional information was as under:
1. Subscription Outstanding as on March 31, 2016 were Rs 6,500,
2. Subscription received in advance as on March 31, 2016 were Rs 4,100,
3. Subscription Outstanding as on March 31, 2017 were Rs 5,400,
4. Subscription received in advance as on March 31, 2017 were Rs 2,500.
Show how that above information would appear in the final accounts for the year ended on March 31, 2017 of Maitrey Sports Club.
Following Receipt and Payment Account was prepared from the cash book of Delhi Charitable Trust for the year ending December 31, 2017
Receipt and Payment Account
for the year ending December 31, 2017
| Receipts |
Amount (Rs) |
Payments | Amount (Rs) |
| Balance b/d | Charity | 11500 | |
| Cash in hand | 11500 | Rent and taxes | 3200 |
| Cash at bank | 12600 | Salary | 6000 |
| Donation | 9000 | Printing | 600 |
| Subscription | 42,800 | Postage | 300 |
| Legacies | 18,000 | Advertisements | 4500 |
| Interest on investment | 4,500 | Insurances | 2000 |
| Sale of old newspapers | 200 | Furniture | 21600 |
| Investment | 23000 | ||
| Balance c/d: | |||
| Cash in hand | 9900 | ||
| Cash at bank | 16000 | ||
| 98,600 | 98,600 |
Prepare Income and expenditure account for the year ended December 31, 2017, and a balance sheet as on that date after the following adjustments:
1. It was decided to treat one-third of the amount received on account of donation as income.
2. Insurance premium was paid in advance for three months.
3. Interest on investment Rs1,100 accrued was not received.
4. Rent Rs600: salary Rs900 and advertisement expenses Rs1,000 outstanding as on December 31, 2017.
From the following Receipt and Payment Account of a club, prepare Income and Expenditure Account for the year ended March 31, 2017 and the Balance Sheet as on that date.
Receipt and Payment Account
for the year ending March 31, 2017
| Receipts | Amount (Rs) | Payments | Amopunt (Rs) | |
| Balance b/d | 3500 | General expenses | 900 | |
| Subscription: | Salary | 16000 | ||
| 2015 - 16 | 2000 | 75000 | Postage | 1300 |
| 2016 - 17 | 70000 | Electricity charges | 7800 | |
| 2017 - 18 | 3000 | Furniture | 26500 | |
| Sale of old Books (Costing Rs 3,200) |
2000 | Books | 13000 | |
| Rent from use of hall | 17000 | Newspapers | 600 | |
| Sale of newspapers | 400 | Meeting expenses | 7200 | |
| Profit from entertainment | 7300 | T.V. set | 16000 | |
| Balance c/d | 15,900 | |||
| 105200 | 105200 | |||
Additional Information :
1. The club has 100 members each paying an annual subscription of Rs 900. Subscriptions outstanding on March 31, 2016 were Rs 3,600.
2. On March 31, 2017, salary outstanding amounted to Rs 1,000, Salary paid included Rs 1,000 for the year 2012.
3. On April 1, 2017 the club owned land and building Rs 25,000, furniture Rs 2,600 and books Rs 6,200.
Following is the Receipt and Payment Account of Women’s Welfare Club for the year ended December 31, 2017:
Receipt and Payment Account
for the year ending December 31, 2017
| Receipts | Amount (Rs) | Payments | Amount (Rs) |
| Balance b/d | 7250 | Salary | 12500 |
| Subscriptions | 81750 | Stationery | 1700 |
| Donations | 3000 | Electricity charges | 9550 |
| Grant from Government | 15000 | Insurance | 7500 |
| Sale of newspapers | 300 | Equipments | 30000 |
| Proceeds of charity show | 16500 | Petty expenses | 500 |
| Interest on investments @10% for full year | 7000 | Expenses on charity show | 12900 |
| Sundries income | 400 | Newspapers | 1000 |
| Lectures fee | 16500 | ||
|
Honorarium to Secretary |
12000 | ||
Balance c/d |
27050 | ||
| 131200 | 131200 |
Additional Information:
| 01.01.2017 (Rs) |
31.12.2017 (Rs) |
|
| Outstanding salaries | 1200 | 1800 |
| Insurance prepaid | 700 | 300 |
| Subscription outstanding | 3750 | 2500 |
| Subscription received in advanced | 1750 | 1000 |
| Electricity charges outstanding | - | 1250 |
| Stock of stationery | 2250 | 700 |
| Equipments | 25600 | 50200 |
| Building | 120000 | 114000 |
Prepare Income and Expenditure Account for the year ended December 31, 2017 and Balance Sheet as on that date.
From the information given below, prepare Receipts and Payments Account of Railway Club for the year ended 31st march, 2019:
|
(₹) |
|
(₹) |
||
| Cash in Hand on 1st April, 2018 | 4,390 | Salaries | 21,500 | |
| Subscription | 37,600 | Honorarium to Secretary | 2,500 | |
| Donations | 8,000 | Interest Received on Investments | 2,950 | |
| Entrance Fees | 4,300 | Printing and Stationery | 350 | |
| Rent Received for Club Halls | 5,250 | Petty Cash Expenses | 900 | |
| Electricity Charges | 3,440 | Insurance Premium Paid | 310 | |
| Taxes paid | 490 | |||
Bengal Cricket Club was inaugurated on 1st April, 2018. It had the following Receipts and Payments during the year ended 31st March, 2019:
Receipts: Entrance Fees ₹ 10,000; Subscriptions ₹ 60,000; Donations ₹ 10,000.
Payments: Rent ₹ 15,000; Postages ₹ 1,000; Newspapers and Magazines ₹ 8,000; Investments ₹ 30,000; Stationery ₹ 4,000; Entertainment Expenses ₹ 3,000; Miscellaneous Expenses ₹ 2,000.
Show the Receipts and Payments Account for the year ended 31st March, 2019.
The following information were obtained from the books of Delhi Club as on 31st March, 2019 at the end of the first year of the Club, prepare Receipts and Payment Account for the year ending 31st March, 2019:
| Receipts |
(₹) |
Payments |
(₹) |
|
| Donation for Building and Library Room | 2,00,000 | Purchase of Land | 10,000 | |
| Entrance Fees | 17,000 | Purchase of Furniture | 1,30,000 | |
| Subscription | 19,000 | Salaries | 4,800 | |
| Lockers Rent | 1,660 | Maintenance of Play Grounds | 1,000 | |
| Refreshment Receipts | 16,000 | Rent | 8,000 | |
| Government Grant | 25,000 | Refreshment Payments | 8,000 | |
| Library Books | 25,000 | |||
| Purchase of 90% Government Bonds | 1,60,000 | |||
| Term Deposit with Bank | 15,000 | |||
From the following particulars of Evergreen club, prepare Receipts and payments Account for the year ended 31st March,2019:
|
(₹) |
|
(₹) |
||
| Cash in Hand on 1st April,2018 | 50,000 | Newspaper and Magazines | 87,000 | |
| Cash at Bank on 1st April,2018 | 3,40,000 | Sale of Old Newspaper | 12,000 | |
| Subscriptions Received | 15,70,000 | Books Purchased | 3,40,000 | |
| Donations Received | 2,80,000 | Sports Materials Purchased | 4,70,000 | |
| Investments purchased | 5,00,000 | Interest on Investments Received | 50,000 | |
| Rent paid | 50,000 | Honorarium to coaches | 1,50,000 | |
| General Expenses | 2,30,000 | Cash in Hand on 31st March,2019 | 30,000 | |
| Postage and stationery | 25,000 | Cash at Bank on 31st March ,2019 | ? | |
From the following particulars of Glorious Club, prepare Receipts and Payments Account for the year ended 31st March 2019.
| Particulars | Amount(₹) |
| Opening balance of cash | 16,000 |
| Subscriptions (including ₹ 13,000 for 2017-18) | 93,000 |
| Investments purchased | 35,000 |
| Maintenance expenses | 15,000 |
| Locker rent | 40,000 |
| Life membership fees | 85,000 |
| Insurance premium | 6,000 |
Following is the Receipts and Payments Account of Indian Youth Club for the year ended 31st March, 2021.
| 'Receipts and Payments Account of Indian Youth Club for the year ended 31st March, 2021 |
|||||
| Receipts | Amount (₹) | Payments | Amount (₹) | ||
| To Balance b/d: | By Salaries | 3,60,000 | |||
| Cash | 25,000 | 3,10,000 | By Printing & Stationery | 19,000 | |
| Bank | 2,85,000 | By Printer | 40,000 | ||
| To Subscriptions (including ₹ 40,000 for year ending 31.3.2022) | 4,00,000 | By Investments | 80,000 | ||
| To Interest on Investments | 1,000 | By Balance cd: | |||
| Cash | 12,000 | 2,12,000 | |||
| Bank | 2,00,000 | ||||
| 7,11,000 | 7,11,000 | ||||
Additional Information:
- Investments were made on 1st October 2020 @ 5% p.a.
- Salaries for March 2021 ₹ 5,000 are unpaid.
- ₹ 3,000 are payable for stationery.
Prepare Income and Expenditure Account of the Club for the year ended 31st March, 2021.
