cash and bank payments. Steps to Prepare Receipt and Payment Account:-
1st Step: To open Receipt and Payment Account It starts by showing the opening balance of cash and bank in its debit side. 2nd Step: To Record the Transactions We record only cash and bank related transactions in it. a) Debit side
In the debit side, we record only all the incomes and receipts which is in the cash and bank form. For example, we have give temple space on rent and we get money. This will show in the debit side of receipt and payment account. We will not show donation in kind. For example, we get the clothes for poor children. Its value will not show in the debit side of receipt and payment account.
b) Credit Side
In the credit side, we record only all the all expenses and payments which is in the cash and bank form. For example, we have take office on rent and we give money. This will show in the credit side of receipt and payment account. We will not show any outstanding expense in it. For example, we have to given salaries to our employees but still end of year we did not pay. This is outstanding expense but we will show in receipt and payment account.
3rd Step: Recording of Transfer to or From Bank.
If any cash is transferred to bank or withdraw from bank, it is not recorded in receipt and payment account because we use only one column both cash and bank receipt and payment. If we are interested to make bank reconciliation statement. We have to make a bank account which will record all bank related transactions only.
4th Step: Closing of Receipt and Payment Account We take the difference of debit and credit side of this account. If debit side