Question

What is the difference between the profit and loss account and the income and expenditure account?

Answer 1

Basis for difference	Profit and loss account	Income and expenditure account
Definition	It is the account that is prepared for finding a net profit or a net loss.	It is the account that is prepared for finding the excess surplus over expenditures or excess amount of expenditures on incomes.
Balance of Account	The balance of profit and loss account will be net profit or a net loss.	When we compare the debit and credit sides of this account, the balance will be surplus or deficit.
Non Profit organization or Business	It is prepared by a business whose aim is to earn profit.	It is prepared to determine the status by not -for profit organizations whose aim is not to earn profit.
Basis of Preparation	Profit and loss accounts are prepared on the basis of trial balance and with the help of some other transactions.	Income and expenditure accounts are prepared on the basis of receipt and payment account and some other information.

Also see:

• Income and Expenditure Account
• Difference Between Capital Expenditure and Revenue Expenditure
• Classification of Expenditure

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