RECEIPTS AND PAYMENTS ACCOUNT FOR SCHOOLS/ EDUCATIONAL INSTITUTIONS

RECEIPTS AND PAYMENTS ACCOUNT FOR SCHOOLS/ EDUCATIONAL INSTITUTIONS

Schools/Educational Institutions generally maintain cash book to record cash transactions on day to day basis. But at the end of the year they prepare a summary of cash transactions based on the cash-book. This summary is prepared in the form of an account. It is called Receipts and Payments account. All cash receipts and payments are recorded in this account whether these belong to current year or next year or previous year. All receipts and payments are recorded in this account whether these are of revenue nature or capital nature. As it is an account so it has the debit side and the credit side. All receipts are recorded on its debit side while all payments are shown on the credit side. This account begins with opening cash or/and bank balance. Closing balance of this account is cash in hand and or cash at bank/overdraft. Items in this account are recorded under suitable heads.

Following are the main features of Receipts and Payments Account:

1. It is prepared at the end of the year taking items from the cash book.

2. It is the summary of all cash transactions of a year put under various heads.

3. It records all cash transactions which occurred during the year concerned irrespective of the period they relate to i.e. previous/current/next year.

4. It records cash transactions both of revenue nature and capital nature.

5. Like any other account it begins with opening balance and ends with closing balance.

NEED FOR PREPARING RECEIPTS AND PAYMENTS ACCOUNT

As some of the transactions of a school are for cash, the Receipts and Payments Account shows these items at one place.

As it is in a summary form, it gives an idea of large number of transactions at a glance. It contains accounting information under various heads. So it gives information item wise for the accounting year.

It shows the closing cash or/and bank balance, this cash/Bank balance is taken to the Balance Sheet.

The Receipts and Payments Account serves the purpose of trial balance and becomes the basis of preparing financial statements i.e. Income and Expenditure Account and Balance sheet for the organisation.

Very small schools prepare only Receipts and Payments Account.

As the name itself suggests, Receipts and Payments Account is an account which has two sides, the debit side and the credit side. All receipts are written on the debit side and payments on the credit side. It has a definite format which is given below:

Dr.                                                                                                     Cr.

Particulars	Amount (in Rs.)	Particulars	Amount (in Rs.)
Balance b/d:    Cash    Bank Fess Entrance Fees Admission Fees Tution Fees ….. ….. ….. Donations Legacies Subscriptions Sale of books etc. Sale of uniform etc. Sale of assets Interest on Investments Miscellaneous receipts Sale of old periodicals etc. Total		Salary Transport Purchase of assets Purchase of books etc. Printing and stationary Repairs and renewals Rent and taxes Investments Honorarium Telephone charges Balance c/d:     Cash     Bank

Brijesh Baranwal

Practicing Chartered Accountant
Mumbai

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

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