Question

What is Receipt and Payment Account? How is it different from Income and Expenditure Account?

Answer 1

Receipts and Payments Accounts is a summary of the Cash Book. This account is prepared by those organisations which maintain their books on cash basis. All cash receipts are recorded on the Receipts side (i.e. Debit side ) and all cash payments are recorded on the Payments side (i.e.Credit side ) of Receipts and Payments Account.
It is Prepared on the basis of cash and bank transactions recorded in the Cash Book. It begins with the opening balances of cash and bank and ends with the closing balances of cash and bank (balancing figure) at the end of the accounting period. It records all the cash and bank transactions both of capital and revenue nature.
It not only records the cash and bank transactions relating to the current accounting period, but also cash and bank receipts (or payments) received during the current accounting period that may be related to the previous or next accounting period. This account only help us to ascertain the closing balance of the cash and helps in assessing the cash position of an NPO. It also forms the basis for the preparation of Income and Expenditure Account. The following are the difference between Receipts and Payments Account and Income and Expenditure Account.

Basis of Difference	Receipts and Payment Account	Income and Expenditure Account
Nature	It is summary of cash book and prepared like one column cash book	It is like profit and loss account.
Nature of Items Include	It records transaction related to both revenue and capital nature.	It records transactions related to revenue nature only.
Debit Side	Debit side of this account records cash and bank receipts during an accounting period.	Debit side of this account records expenses and losses incurred in the current accounting period.
Credit side	Credit side of this account records payments in cash and through cheques.	Credit side of this account records income and gains earned in the current accounting period.
Type of account	It is a Real Account	It is a Nominal Account
Depreciation	It does not record Depreciation.	It records Depreciation.
Object	This account depicts the cash position of an NPO.	This account shows the net result in terms of surplus of deficits due to the business activities during the year.
Opening Balance	This account begins with the opening balance of cash in hand and cash at bank or overdraft	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.
Closing Balance	The balancing figure of this account is expressed in terms of the closing balance of cash in hand and cash at bank or overdraft	The balancing figure is expressed in terms of either surplus ( if income > expenses) or deficit ( if expenses > income).
Depreciation	It does not include non-cash items like depreciation, appreciation, etc.	It includes non-cash items like depreciation, bad-debts, provisions, etc. in order to ascertain the actual net profit or net loss.
Basis of preparation	It is prepared on cash basis.	It is prepared on accrual basis.