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Which is the nature of receipt and payment account ?
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Which is the nature of receipt and payment account ?
Nature of Receipt and Payment Account
Receipt and Payment Account is a summary of all cash transactions made by an organization during a particular period of time. It is a type of cash book which records all cash receipts and payments made by an organization.
Receipts
- Receipts in the Receipt and Payment Account are all cash receipts, both capital and revenue, received by the organization during the accounting period.
- Capital receipts include the money received from the sale of assets, loans, and capital contributions from members.
- Revenue receipts include all other receipts such as donations, subscriptions, and fees.
- The receipts are recorded in the debit column of the Receipt and Payment Account.
- The total of the receipts column represents the total cash received during the accounting period.
Payments
- Payments in the Receipt and Payment Account are all cash payments, both capital and revenue, made by the organization during the accounting period.
- Capital payments include the money paid for the purchase of assets, repayment of loans, and distribution of profits.
- Revenue payments include all other payments such as salaries, rent, and utility bills.
- The payments are recorded in the credit column of the Receipt and Payment Account.
- The total of the payments column represents the total cash paid during the accounting period.
Cash Balance
- The Receipt and Payment Account also shows the opening and closing cash balance of an organization.
- The opening cash balance is the amount of cash on hand at the beginning of the accounting period.
- The closing cash balance is the amount of cash on hand at the end of the accounting period.
- The closing cash balance is calculated by adding the total receipts and deducting the total payments from the opening cash balance.
Usage
- The Receipt and Payment Account is useful for small organizations that do not maintain a complete set of accounting records.
- It provides a summary of all cash transactions made by an organization during a particular period of time.
- The Receipt and Payment Account can be used to prepare the Cash Flow Statement, which is an important financial statement that shows the inflow and outflow of cash during an accounting period.
- The Receipt and Payment Account can also be used to prepare the Income and Expenditure Account, which is a summary of all revenue and expenses incurred by an organization during an accounting period.
Community Answer
Which is the nature of receipt and payment account ?
It is a summarized statement of all cash transactions during an accounting year & obviously a real A/c :)
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Which is the nature of receipt and payment account ?
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Which is the nature of receipt and payment account ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Which is the nature of receipt and payment account ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which is the nature of receipt and payment account ?.
Which is the nature of receipt and payment account ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Which is the nature of receipt and payment account ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which is the nature of receipt and payment account ?.
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