The correct sequence for preparing Receipt and Payment Account:

(A) Take the opening balance of Cash in hand and Cash at bank
(B) Find out the difference between total of Debit side and total of Credit side of the Account and enter the same on credit side as closing balance of cash/bank
(C) Total amounts of all receipts on its debit side
(D) Total amounts of all payments on its credit side
(E) None of the receivable income and payable expenses is to be entered in this account

Choose the correct answer from the options given below:

(A), (C), (D), (E), (B)

The correct answer is Option (2) - (A), (C), (D), (E), (B).

(A). Take the opening balances of cash in hand and cash at bank and enter them on the debit side. In case there is a bank overdraft at the beginning of the year, enter the same on the credit side of this account.

(C). Show the total amounts of all receipts on its debit side irrespective of their nature (whether capital or revenue) and whether they pertain to past, current, and future periods.

(D). Show the total amounts of all payments on its credit side irrespective of their nature (whether capital or revenue) and whether they pertain to past, current, and future periods.

(E). None of the receivable income and payable expense is to be entered in this account as they do not involve inflow or outflow of cash.

(B). Find out the difference between the total of the debit side and the total of the credit side of the account and enter the same on the credit side as the closing balance of cash/bank. In case, however, the total of the credit side is more than that of the total of the debit side, show the difference on the debit as bank overdraft and close the account.