Receipts and payments account format

The standard format

1. Balance b/d (opening cash and bank)
2. Add: all receipts during the year
3. Less: all payments during the year
4. Balance c/d (closing cash and bank)

Filled example

Notes

• It is purely cash-based, so it includes capital items like equipment and ignores accruals.
• It does not distinguish capital from revenue, which is why the income and expenditure account is also needed.
• The closing balance is the actual cash and bank the club holds.

Building and reading this format

A receipts and payments account is a summarised cash book for a club or society. It is prepared on the cash basis. It records money actually received and paid in the period, whether the amounts relate to this year, last year or next.

It is laid out like a two-sided cash account. Receipts go on the debit side and payments on the credit side. The opening cash and bank balance is brought down at the top of the debit side, and the closing balance is carried down at the foot.

Begin with the opening balance of cash and bank, say RM1,200 on 1 January. Then list all the money received: subscriptions, takings from a social event, donations, interest received and the proceeds of selling an old asset.

Make no adjustments. Enter the raw cash received, including subscriptions that relate to other years.

The credit side lists every payment at its raw cash amount. This covers wages, rent, printing, the cost of running events, and the full cost of any asset bought, such as new furniture. Capital and revenue payments are mixed together, because cash does not distinguish between them.

The balancing figure is the closing cash and bank balance, say RM1,750. It must equal the cash and bank the club actually holds at the year end.

This account tells you one thing precisely: how the club's cash position changed. A higher closing balance than opening means more cash came in than went out. It cannot tell you whether the club performed well, because it ignores amounts owing, prepayments, depreciation and the difference between capital and revenue.

That is why a club also prepares an income and expenditure account. A favourite exam question asks how the two differ.

Marks are lost by treating this account like a performance statement. Depreciation has no place here, because no cash changes hands. Adjusting subscriptions for accruals and prepayments breaks the cash basis.

The opening balance is essential, because the account continues from last period's cash.

Do not call the closing balance a "surplus". That word belongs to the income and expenditure account. Here it is simply the cash and bank balance carried down.

Ask one question of every item: did cash come in or go out? Money in goes on the debit side at its full amount.

Money out goes on the credit side at its full amount. Head the account with the club's name and the period.

If you mix up this account with the income and expenditure account, one of our teachers can show you the difference using the same club figures in both. Book a trial class

Related how-to

• How to prepare a receipts and payments account
• How to prepare an income and expenditure account

These formats are standard accounting practice with our own figures. Check your board's exact requirements on the exam boards page.