Question

State the basis of accounting on which ‘Receipt and payment account’ is prepared in case of non-for profit organisation.

Answer 1

Let us make in-depth study of the meaning and features of Receipts and Payments Account for Not-For-Profit organisations.

Meaning of Receipts and Payments Account:

Receipts and Payments Account is a real account showing summary of all cash and bank transactions occurred during the accounting year. It is prepared at the end of the accounting year. All cash and bank transactions, taken from the cash book are shown under suitable headings and titles, such as subscriptions, salaries, rent, electricity charges etc.

It is worth mentioning that Receipts and Payments Account is a summary of all cash and bank transactions under various suitable heads. For example, entrance fees received from the members on different dates appear on the debit side of the cash book on respective dates.

Answer 2

Answer:

Explanation:

Receipt and payment account is prepared on ' CASH BASIS of accounting'.

REMEMBER:

In accounts, only receipt and payment account and cash book are prepared on CASH BASIS of accounting...all the other accounts are prepared on ACCRUEL BASIS of accounting.

Note:-BALANCE SHEET is not an account..it is a statement.