Introduction:
When a person gives a piece of land as a gift to a non-profit organization, it is considered a capital receipt in the receipt and payment account of the organization. This means that the value of the land is recorded as a capital receipt rather than as income or revenue. There are several reasons why this is the case.

Reasons for treating land gift as a capital receipt:

1. Non-profit organizations do not generate profits:
Non-profit organizations are not established for the purpose of making profits. Instead, their primary goal is to serve a specific cause or contribute to the welfare of society. As a result, any assets received by the organization, such as land, should be treated as capital receipts rather than income.

2. Donors' intention:
When a person gives a piece of land as a gift to a non-profit organization, their intention is usually to contribute towards the organization's long-term sustainability and support its mission. By treating the land gift as a capital receipt, the organization acknowledges the donor's intention and recognizes the value of the asset received.

3. Capital nature of land:
Land is a long-term asset with a significant economic value. It is not intended to be sold or consumed in the normal course of the organization's activities. By treating the land gift as a capital receipt, the organization reflects the non-revenue generating nature of the asset and its potential for long-term capital appreciation.

4. Impact on financial position:
Treating the land gift as a capital receipt allows the non-profit organization to accurately reflect its financial position. The value of the land is recorded as an asset on the balance sheet, contributing to the organization's net worth. This provides a more comprehensive view of the organization's financial health and its ability to fulfill its objectives.

5. Accounting principles:
Accounting principles, such as the accrual basis of accounting, guide the treatment of transactions in the financial statements. Capital receipts, including the land gift, are recorded as assets on the balance sheet in accordance with these principles. This ensures consistency and comparability in financial reporting across different non-profit organizations.

Conclusion:
Treating a gift of land as a capital receipt in the receipt and payment account of a non-profit organization is essential for accurately reflecting the organization's financial position, acknowledging the donor's intention, and adhering to accounting principles. By doing so, the organization can effectively manage and utilize its assets to further its mission and serve the community.