Question

State the steps involved in the preparation of Receipts and Payments Account from the Income and Expenditure Account. Give example.

Answer 1

Ventures in the Preparation of Receipts and Payments Account:-

Step 1 – Take opening parity of trade out hand and money at bank from the Cash Book and enter on the charge side of Receipt and Payments Accounts as its first thing. Credit Balance, assuming any, of bank adjust (i.e., Bank Overdraft) might be appeared on the credit side of Receipts and Payments Account as its first thing.

Step 2 – Take thing shrewd total of different receipts and enter on the charge side regardless of their inclination (i.e., capital or income) and disregarding the period to which these receipts relate.

Step 3 – Take thing savvy total of different payments and enter on the credit side independent of their inclination (i.e., capital or income) and disregarding the period (past, present or future) to which these payments relate.

Step 4 – Register the contrast between the aggregate of charge side and aggregate of credit side of the Receipts and Payments Account and put the distinction as an afterthought which is short.

Give us a chance to take a case through which we will clarify how Receipts and Payments Account can be set up from the given money book.

Illustration:

Step 1- Put opening equalization of bank and money on the charge side of the Receipts and Payments Account as its first thing.

Step 2 – Presently we should move to take thing shrewd total of different receipts.

Thing astute total of different receipts

Enthusiasm on Government Bonds

Step 3 – Take total of different payments and put them on the payments side of Receipts and Payments Account.

Step 4 – Process the distinction between charge side and credit side of the Receipts and Payments Account and put the same as an afterthought which is short.
State the steps involved in the preparation of Receipt and Payments Account from the Income and Expenditure Account.