Receipts and payments A/c Partnership

 

Concept Of Receipts And Payments Account
Receipt and payment account is a summary of cash receipts and payments during the accounting period. It records all cash receipts and cash payments including capital receipts and revenue revenue receipts irrespective of accounting period. All cash receipts are recorded on debit side or receipts side and all cash payments are recorded on credit or payments side of receipts and payments account.

Features Of Receipts And Payments Account
The essential features of receipts and payments account are as follows:

1. Summary Of Cash Transactions
All cash receipts and payments made by the concern during the accounting period are recorded in this book. Therefore, receipts and payments account can be taken as a summary of cash transactions.

2. Cash And Bank Items In One Column
All receipts either cash or bank are recorded in receipts column of receipts side where all cash and bank payments are recorded in one column of payment column of receipts and payments account. The cash and bank transactions are merged to avoid contra entries of cash and bank transactions.

3. No Distinction Between Capital And Revenue
All cash receipts and cash payments irrespective of capital and revenue nature are recorded in receipts and payments account. No distinct is made for capital receipts , revenue receipts, capital expenditures and revenue expenditures.

4. Opening And Closing Balance Of Cash
Receipts and payments account starts from opening balance of cash and bank ends with the closing balance of cash and bank.

5. Recording Of Cash Receipts And Payments
All cash and cheque receipts are recorded on debit side where as all cash and cheque payments are recorded on credit side of receipts and payments account.

6. Ignores Non-cash Transactions
Receipts and payments account does not record non-cash transactions.

Limitations Of Receipts And Payments Account
The receipts and payments accounts suffers from the following limitations:

1. Receipts and payments account does not differentiate capital and revenue expenses and incomes.
2. Receipts and payments account fails to show expenses and incomes on accrual basis.
3. Receipts and payments account fails to show surplus and deficiency.
4. Receipts and payments account fails to show non-cash transactions such as depreciation of fixed assets, pilferage etc.

 

 

 

 

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