Question

In receipt and payment account how will treat the outstanding subscription

Answer 1

Answer:

“A receipt and payment account is a summarized cash book for a given period”.”This is a summary of the cash transactions as in the cash book”. Non-profit organizations prepare receipt and payment account at the end of the year. With the help of this account and some additional information, we prepare income and expenditure account to disclose the true results of non-profit organizations.

Explanation:

Receipt and payment account cannot disclose the true result of a non-profit organization. We prepare this account on the basis of the information available from the cash book.

Characteristics of Receipt and Payment Account

Following are the characteristics of receipt and payment account:

It is a summary of the cash book.

We record all the cash receipts during the whole year on its debit side. Whereas, we write all the cash payments for the whole year on its credit side.

We include both receipts and payments in cash whether they are of capital and revenue nature.

We record only cash transactions in receipt and payment account.

It generally shows a debit balance. In the case of overdraft balance, its net balance may be credit.

Its closing balance shows closing cash in hand and closing cash at the bank.

Non-cash items such as depreciation, outstanding expenses, accrued incomes are also shown in this account.