Procedure for preparation of Receipts and payments account as follows.
1. This account always starts with opening balance of cash in hand and cash at bank, cash in hand always has a debit balance and hence appears on the debit side as the first item. Cash at bank has either a debit balance or a credit balance (overdraft).
2. All receipts made in cash during the accounting year will be shown on the debit side and all cash payments made during the accounting year are shown on the credit side.
3. Only actual cash receipts and cash payments are recorded in this account.
4. At end of the accounting period, this account is balanced and it shows the closing balance of cash in hand and at bank or bank overdraft, as the case may be.
