Question

Distinguish between Receipt and Payment Account ana Income and Expenditure Account.

Answer 1

Difference between Receipts and Payment Account and Income and Expenditure Account

$$\begin{array}{ccc}\text{Basis of Difference}& \text{Receipts and Payments Account}& \text{Income and Expenditure Account}\\ \text{(1) Nature}& \text{It is a summary of cash and bank}& \text{It is a summary of current year}\\ & \text{transactions.}& \text{income and expenses.}\\ \text{(2) Revenue and Capital}& \text{It records transactions related to both}& \text{It records transactions related}\\ & \text{revenue and capital nature.}& \text{to revenue nature only.}\\ \text{(3) Debit Side}& \text{Debit side of this account records cash}& \text{Debit side of this account}\\ & \text{and bank receipts during an}& \text{records expenses and losses}\\ & \text{accounting period.}& \text{incurred in the current}\\ & & \text{accounting period.}\\ \text{(4) Credit Side}& \text{Credit side of this account records}& \text{Credit side of this account}\\ & \text{payments in cash and through}& \text{records income and gains}\\ & \text{cheques.}& \text{earned in the current}\\ & & \text{accounting period.}\\ \text{(5) Type of Account}& \text{It is a real account.}& \text{It is a nominal account.}\\ \text{(6) Period}& \text{It records receipts and payments}& \text{It only records income and}\\ & \text{made during the year that may be}& \text{expenditure made during the}\\ & \text{related to the current accounting}& \text{current accounting period.}\\ & \text{period or the preceding period and the}& \\ & \text{succeeding accounting period.}& \\ \text{(7) Object}& \text{This account depicts the cash position}& \text{This account shows the net}\\ & \text{of an NPO.}& \text{result in terms of surplus or}\\ & & \text{deficits due to the business}\\ & & \text{activities during the year.}\\ \text{(8) Depreciation}& \text{It does not include non-cash items like}& \text{It includes non-cash items like}\\ & \text{depreciation, provisions etc.}& \text{depreciation, provisions etc. in}\\ & & \text{order to ascertain the actual net}\\ & & \text{profit or net loss.}\\ \text{(9) Opening Balance}& \text{This account begins with the opening}& \text{Usually, it has no opening}\\ & \text{balance of cash in hand and cash at}& \text{balance but sometimes surplus}\\ & \text{bank or overdraft.}& \text{or deficits forwarded from the}\\ & & \text{last accounting period (if not}\\ & & \text{added to the capital fund) can}\\ & & \text{be shown as the opening}\\ & & \text{balance of this account.}\\ \text{(10) Closing Balance}& \text{The balancing figure of this account is}& \text{The balancing figure is}\\ & \text{expressed in terms of the closing}& \text{expressed in terms of either}\\ & \text{balance of cash in hand and cash at}& \text{surplus (if incomes > expenses)}\\ & \text{bank or overdraft.}& \text{of deficit (if expenses > incomes)}\\ \text{(11) Basis of Preparation}& \text{It is prepared on cash basis of}& \text{It is prepared on accrual basis}\\ & \text{accounting.}& \text{of accounting.}\end{array}$$