Tag: meaning and characteristics of not-for-profit organisation

The Receipt and Payment account starts with opening balance of cash and bank and end with the closing balance of cash and bank. 

A receipt and payment account generally shows a debit balance. To ascertain any missing item of receipt or payment, generally cash book summary is prepared.

Receipt and Payment account is a summary of cash/bank transactions of NPO for specialized accounting period. This Statement records both capital and revenue nature items.

Receipt and Payment account is a summarized statement of all cash transactions during an accounting year. Income and Expenditure account is the account through which surplus or deficit of a non-profit-seeking concern is ascertained.

Income and expenditure account records income on the right hand side and expenditure on the left hand side. An Income and expenditure account is just like Profit and Loss account  where expenses and losses are debited and income and gains are credit. 

Receipt and Payment account is prepared on the last day of accounting year. This account records transaction related to cash in the accounting year.

Receipt and Payment account is a summary of cash book where receipts are recorded on debit side and payments are recorded on credit side.

A receipts and payment account is just like a cash account hence it begins with opening balance and ends with closing balance of cash. Hence the debit balance of receipts and payments account just like cash account reflects closing balance of cash at the end of the year after taking into account all the payments and receipts.

Sale of scraps is a routine activity which generates indirect income for any entity whose sole objective is not to deal in scraps. Hence, amount received from sale of scraps by a charitable hospital is treated as an income and booked in the income and expenditure account.

Option A is correct. Legacy is the amount which a not for profit organisation receive as per the will of a deceased person. As this is a receipt it is recorded on debit side of Receipts and Payments A/c.