Receipts and payments account discloses

A receipts and payments account is prepared by non-trading organisations (clubs, societies, associations) as a summary of the actual cash and bank transactions recorded in the cash book for the year. It opens with the cash/bank balance at the start of the period, lists every amount actually received on one side and every amount actually paid out on the other, and closes with the balance carried forward.

Because it is a pure summary of cash movements, it records every receipt and payment exactly as cash changed hands, regardless of whether that item relates to running the organisation day to day (revenue in nature) or to buying or selling a long-term asset (capital in nature). A payment for a new building, furniture, or equipment therefore appears in the receipts and payments account on the payments side just like a payment for stationery or refreshments, because both involved cash actually moving. This is what distinguishes it from the income and expenditure account, which excludes capital items and only reports revenue income and expenditure matched to the period they relate to.

Debtors, creditors, and prepayments, by contrast, are accrual-accounting concepts: they represent amounts owed or paid in advance that have not yet resulted in a cash movement. A receipts and payments account, being cash-based, does not disclose any of these because it only records money that has actually been received or paid.

Examination reminder: the receipts and payments account is a cash-basis summary, so it captures capital items but never debtors, creditors, or prepayments, which only appear once accrual adjustments are made in the income and expenditure account and balance sheet.