Meaning: A summary prepared by non-trading concern, of cash receipts and cash payments effected during the year, is known as Receipts- Payments Account.

Explanation:

• Receipts-Payments Account is a type of Cash-book/Cash Account.
• Opening and closing cash balance and bank balance (or bank overdraft) are shown in this account.
• On its debit side cash receipts and on credit side cash payments are recorded.
• In addition to cash transactions, bank transactions are also recorded in the account.
• This account is a short summary of cash transactions during the year.

Points to be kept in mind while preparing the Receipts-Payments Account:

1. Show the opening cash or bank balance on debit side of Receipts-Payments Account. If there is an opening bank overdraft, then / show it on the credit side of this account.

2. On the debit side of the Receipts and Payments Account, all the cash and cheque received during the year are recorded.

3. On the credit side of the Receipts and Payments Account, all the payments made during the year in cash or cheque are recorded.

4. In the Receipts and Payment Account, amount received or paid for any year are recorded.

5. In the Receipts and Payments Account, the capital income and the revenue incomes, the capital expense and revenue expense both are recorded.

6. In the Receipts and Payments Account, the outstanding incomes and expenses are not recorded.

7. The non-cash transactions are not recorded in the Receipts and Payments Account. For e.g., Depreciation, Bad-debts reserve, Credit purchase of assets, Taxation provision, etc.

8. While closing the Receipts and Payments Account:

• If the total of the debit side is more, then the difference is recorded on the credit side and is the closing balance.
• If the total of credit side is more, the difference is recorded on the debit side and it is the closing bank overdraft.