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Receipts and Payments Account | Non-trading Concern | NPO

Arjun EP

Published on: June 1, 2021

Receipts and Payments Account in NPO

Receipt and payments account is similar to single column cash book of trading concern.

Receipt and payment is a real account because cash is real account.

It also records bank transaction like cash.

Most of non-profit concerns prepare a cash book at the end of the year.

It contains all cash receipts and cash payments transactions.

All receipts are recorded in debit side and all payments are recorded in credit side.

It records only cash transactions relate to the present, past or future period.

These cash may be capitalized or revenue nature.

Keep in Mind (KIM)

Some organizations think receipt and payment account is not an account.

Because, it is not based on double entry system of book keeping.

This account is just a summary of a cash book.

No adjustments are required for accrued or deferred transactions.

Features of Receipt and Payment Account

The main features of receipt and payment accounts are given below:

Receipts and payments account is a real account.

It is prepared on cash basis.

This account is opened with the opening cash balance of the current year.

All cash or cheques received are recorded on the debit side.

All payments by cash or cheques are recorded on the credit side.

Both capital and revenue cash is recorded in this account.

All receipts and payment related to previous year, current year or future years are recorded.

Preparation of receipt and payment account does not involve any adjustments.

Receipt and payment is closed with the cash balance (bank balance also) available at the end.

Limitations of Receipt and Payment Account

The main limitations of receipt and payment accounts are given below:

Receipt and payment does not disclose the income or expenditure of the current year.

This account is not prepared on accrual basis.

Balance sheet cannot be prepared from this account only.

Receipt and payment account is only summary of cash book.

Depreciation and outstanding expenses are not recorded in this account.

This account does not show financial position of the concern.

Difference between Receipt and Payment Account and Cash Book

Basis	Receipt and payment account	Cash book
Nature	It is not a general ledger, so there is not ledger folio number.	It is general ledger, so there is ledger folio number.
Preparation	It is prepared by non-trading concern only.	It is prepared by non-trading as well as trading concern.
Date	It is prepared at the end of accounting period for closing cash balance.	It is prepared daily for cash transactions and cash in hand.
Types	It has only one type.	It has four types; single column, double column, triple column and petty cash book.

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Receipt a Payment Account

XYZ Club

As on 31^st ………

Receipts		Amount	Payments		Amount
To Opening balance:			By Salary and wages		xxxx
Cash	xxxx		By Rent paid		xxxx
Bank	xxxx		By Electricity and water		xxxx
To Subscription		xxxx	By Telephone and mobile		xxxx
To Donation		xxxx	By Internet and cable expenses		xxxx
To Grants		xxxx	By Printing and stationery		xxxx
To Life membership fees		xxxx	By Journals and periodicals		xxxx
To Legacies		xxxx	By Books purchase		xxxx
To Tournament receipts		xxxx	By Honorarium paid		xxxx
To Sales of fixed assets		xxxx	By Scholarship		xxxx
To Sales of old assets		xxxx	By Trainer’s fees		xxxx
To Sales of investment		xxxx	By General expenses		xxxx
To Rent received (sublet)		xxxx	By Entertainment expenses		xxxx
To Interest received (on investment)		xxxx	By Seminar and party expenses		xxxx
To Dividend received		xxxx	By Insurance premium		xxxx
To Locker’s rent		xxxx	By Tournament expenses		xxxx
To Honorarium received		xxxx	By Interest on loan		xxxx
To Proceeds of lecturer		xxxx	By Repair/renewal expenses		xxxx
To Proceeds of concert		xxxx	By Travelling expenses		xxxx
To Sales of old newspaper		xxxx	By Loan paid		xxxx
To Sales of scrapes		xxxx	By Audit fees		xxxx
To Fees from patients*		xxxx	By Bank charge		xxxx
To Bed charges received*		xxxx	By Municipal tax		xxxx
To Other receipts or income		xxxx	By Help to needy (gratuity)		xxxx
			By Medicines* (purchase)		xxxx
			By Furniture (purchase)		xxxx
			By Equipment (purchase)		xxxx
			By Land and building (purchase)		xxxx
			By Plant and machinery (purchase)		xxxx
			By Investment (made)		xxxx
			By Other payment/expenses		xxxx
			By Closing balance:
			Cash	xxxx
			Bank	xxxx	xxxx
		xxxxx			xxxxx

Note: This asterisk (*) are related to hospital.

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1A

The following extracted data is given by DDR Club:

Transactions	Amount $
Cash balance (1 January)	10,500	Rent paid	24,000
Subscription	55,000	Electricity and telephone	13,000
Entrance fees	35,000	Magazines	2,500
Donations received	1,20,000	Sundry expenses	15,000
Salary and wages Depreciation	86,000 2,500	Computer purchase	27,500

Required: Receipts and payments account for the year ended 31 December.

[Answer: Cash balance = $52,500]

SOLUTION:

Receipt and Payment Account

Of DDR Club

Receipt	Amount $	Payment	Amount $
To Opening balance	10,500	By Salary and wages	86,000
To Subscription	55,000	By Rent paid	24,000
To Entrance fees	35,000	By Electricity and telephone	13,000
To Donation	1,20,000	By Magazines	2,500
		By Sundry expenses	15,000
		By Computer purchase	27,500
		By Closing balance (b/f)	52,500
	2,20,500		2,20,500

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1B

MM Cultural Club had following extracted balances:

Particulars	Amount $		Amount $
Opening balance	25,000	Sales of old furniture	5,000
Subscription	1,50,000	Computer purchase	22,000
Donation	60,000	Concert expenses	17,000
Proceeds from concert	30,000	Entrance fees	33,000
Salary and wages	1,20,000	Miscellaneous expenses	13,000
Electricity bill Outstanding rent	4,000 6,000	Mobile and net expenses	10,000

Required: Receipt and payment account

[Answer: Cash balance = $117,000]

SOLUTION:

Receipt and Payment Account

Of MM Cultural Club

Receipt	Amount $	Payment	Amount $
To Opening balance	25,000	By Salary and wages	1,20,000
To Subscription	1,50,000	By Electricity bill	4,000
To Donation	60,000	By Computer purchase	22,000
To Proceeds from concert	33,000	By Concert expenses	17,000
To Sales of old furniture	5,000	By Miscellaneous expenses	13,000
To Entrance fees	30,000	By Mobile and net expenses	10,000
		By Closing balance (b/f)	1,17,000
	3,03,000		2,38,000

Keep in Mind (KIM)

1	Outstanding may be for income and expenses.
	If income (receivable):
	Credited in income and expenditure account
	Show in assets side of balance sheet

	If expenses (payable):
	Debited in income and expenditure account
	Show in liabilities side of balance sheet

2	If fund and expenses are given in receipt and payment account or in the question:
	Deduct related expenses from fund in liabilities side of balance sheet
	Viz do not write expenses in debit side of income and expenditure account

3	Outstanding is added with related expenses and is shown in liabilities side of balance sheet.
4	Prepaid is deducted from related expenses and is shown in assets side of balance sheet.

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PROBLEMS AND ANSWERS OF NON-TRADING CONCERN (NPO)

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1A

The following extracted balances are given to you by a non-trading concern:

Cash balance (1 Jan)	$15,000	Furniture purchase	$15,000
Subscription	80,000	Equipment purchase	30,000
Donation	60,000	Sundry expenses	6,000
Sales of old news paper	1,000	Life membership fees	17,000
Salary	90,000	Sundry receipt	3,000
Water and electricity expenses Depreciation on furniture	4,000 1,350

Required: Receipt and payment account

[Answer: Cash balance = $31,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1B

MK Football Club has following extracted balances:

Opening balance	$17,000	Sales of old furniture	$5,000
Subscription	120,000	Computer purchase	30,000
Donation	50,000	Tournament expenses	12,000
Receipt from tournament	21,000	Entrance fees	25,000
Salary and wages	120,000	Miscellaneous expenses	13,000
Electricity bill expenses Water bill payable	4,000 150	Mobile and net expenses	8,000