Question

Give the advantages of receipt and payment accounts

Answer 1

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YOUR ANSWER ⏬⏬⏬❤

ADVANTAGES OF RECEIPT AND PAYMENT ACCOUNT - - - -

✨) Know the cash in the business - - Receipt and payment account is prepared by the non- profit organisation. It is prepared by non - profit organisation for knowing all the receipts and payments during the year... It is the summary of cash basis. Hence cash balance easily known with that account.


✨) Helpful in preparation of income and expenditure account - - -

Receipt and payment account is helpful in preparation of income and expenditure account bcx the balance at the end of this account is then traferred to the income and expenditure account. Without its preparation, income and expenditure account can't prepared.


✨) Records both capital as well as revenue items - - - - -
Receipt and payment account records the both capital as well as revenue items. But it is not possible in income and expenditure account. Hence it provides benefits for this purpose.


✨) Know about closing balance - - Receipt and payment account has closing balance of cash in hand and cash at bank.. It helps the business to know how much cash is retain in. the business for meeting future uncertainty


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Answer 2

Answer:

It is through this account that the total payments and total receipts are easily available in the same place.

It is through this account that we can ascertain the closing balance of cash at the end of the year.

This account proves to be a verification point for the cash book. This is because the organization prepares it after the preparation of the Cash Book and is nothing but the summary of it.

Explanation:

It is also known as Cash Book Summary for the Not-for-Profit organizations because it records all the cash and cash equivalents like cheques transactions throughout the year.

It starts with beginning cash and bank balance and ends with ending cash and bank balance.

This account shows cash transactions of both capital and revenue nature.

Mostly it shows a debit balance. In the exceptional case of overdraft balance, its net balance may be credit.

The concern prepares it on the last day of the accounting year.

Double Entry bookkeeping system does not apply to this account since it is a summary of transactions which are already recorded in the Cash Book.

It does not involve transactions which do not include cash or bank items.