Question

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

Answer 1

Difference between Receipts and Payment Account and Income and Expenditure Account

Basis of Difference	Receipts and Payments Account	Income and Expenditure Account
Nature Nature of Items include Debit side Credit side Type of account Depreciation Object Opening Balance Closing Balance Depreciation Basis for Preparation	It is a summary of cash book and prepared like one column cash book. It records transactions related to both revenue and capital nature Debit side of this account records cash and bank receipts during and accounting period. Credit side of this account recorded payments in cash and through cheques. It is a Real Account It does not record Depreciation. This account depicts the cash position of an NPO. This accounting begins with the opening balance of cash in hand and cash at bank or overdraft. The balancing figure of this account is expressed in terms of the closing balance of cash in hand and cash at bank or overdraft. It does not include non-cash items like depreciation, appreciation, etc. It is on cash basis	It is like profit and loss account. It records transactions related to revenue nature only. Debit side if this account records expenses and losses incurred in the current accounting period. Credit side of this account records income and gains earned in the current accounting period. It is a Nominal Account It records depreciation. This account shows the net result in terms of surplus of deficits due to the business activities during the year. Usually, it has no opening balance but sometimes surplus or deficits forwarded from the last accounting period(if not added to the Capital Fund) can be shown as the opening balance of this account. The balancing figure is expressed in terms of either surplus (if incomes> expenses) or deficit ( if expenses > incomes). It includes non- cash items like depreciation, bad-debts, provisions, etc in order to ascertain the actual net profit or net loss. It is prepared on accrual basis.