What is the difference between receipts and payments and income and expenditure?

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Solution

Basis of difference

Income and expenditure account.

Receipts and payments account.

Revenue and capital

It records only the revenue type of transaction.

It records transactions related to both revenue and capital in nature.

Nature

It outlines the current year’s income and expenses.

It outlines transactions of cash and bank.

Type of account

It is a nominal account.

It is a real account.

System

It is prepared on an accrual basis.

It is prepared on a cash basis.

Also see:

Income and Expenditure Account

Difference Between Capital Expenditure and Revenue Expenditure

Classification of Expenditure

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What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?

RECEIPTS AND PAYMENTS Account for the year ended March 31, 2018
Dr.					Cr.
Receipts		₹	Payments	₹
To Balance b/d		2,00,000	By Rent	60,000
To Entrance Fees:			(including ₹15,000 for 2016-17)
2016-17	10,000		By Insurance Premium	60,000
2017-18	50,000	60,000	(including ₹15,000 for 2018-19)
To Subscriptions:			By Sports Equipments	50,000
2016-17	10,000		By Furniture	60,000
2017-18(90%)	90,000		(Purchased on 31st March,2018)
2018-19	5,000	1,05,000	By 8% Fixed Deposit	1,20,000
To Life Membership Fees		20,000	(made on 1st October, 2017)
To Donations		1,20,000	By Tournament Expenses	10,000
To Donation for Tournament		50,000	By Books	20,000
To Subscription for Governor's Party		15,000	By Newspapers	1,000
To Interest on 8% Fixed Deposit		2,400	By Printing and Stationery	19,000
To Sale of Old Newspapers		300	By Balance c/d	1,80,000
To Sale of Old Sports Materials		500
(Book Value ₹ 1,200)
To Locker Rent		6,800
(including ₹ 600 for 2016-17)

		5,80,000		5,80,000

Distinguish between Receipts and Payments Account and Income and Expenditure Account.

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Basis of difference	Income and expenditure account.	Receipts and payments account.
Revenue and capital	It records only the revenue type of transaction.	It records transactions related to both revenue and capital in nature.
Nature	It outlines the current year’s income and expenses.	It outlines transactions of cash and bank.
Type of account	It is a nominal account.	It is a real account.
System	It is prepared on an accrual basis.	It is prepared on a cash basis.