Question

state any four difference between receipt and payment account and income and expenditure account​

Answer 1

Answer:

The following are the main differences between receipts and payments account and income and expenditure account:

1. Nature:-

Receipts and payments account is a summary of cash transactions for a period and it is a real account. Income and expenditure account is a summary of expenditure and income like trading and profit and loss account and it is a nominal account.

2. Objective:-

Receipts and payments account is prepared to show cash and bank receipts and payments during the period to derive closing balance of cash and bank. Income and expenditure account is prepared to show the net result of the operation during the period to derive surplus or deficit.

3. Recording:-

All cash and cheque receipts are recorded on debit side of receipts and payments account where as all cash and bank payments are recorded on credit side. In income and expenditure account all expenditure of revenue nature are recorded on debit side and all incomes of revenue nature are recorded on credit side.

4. Capital And Revenue Items:-

There is no distinction between capital and revenue receipts and payments in receipts and payments account. All expenses and incomes of revenue nature are recorded on accrual basis in income and expenditure account.

5. Contents:-

Receipts and payments account contains only cash and bank transactions. Income and expenditure account contains both cash and non-cash expenses and incomes of revenue nature.

6. Balance Sheet Requirement:-

Receipts and payments account is not required to prepare balance sheet. Income and expenditure account is required to prepare balance sheet.

7. Adjustments:-

No adjustments are required in receipts and payments account. In income and expenditure account adjustments are made because it is prepared on accrual basis.

Answer 2

ANSWER :

Four difference between Receipts and Payments Account and Income and Expenditure Account are as follows :-

[1] Meaning :

• Receipts and Payments Account prepared by not for profit organisation is merely a summary of cash transaction under prepare companies which have taken place during the accounting period.

• On the other hand, Income and Expenditure Account is an account prepared by not for profit organisation to see whether the revenue of a particular period are sufficient to cover the expenses of that period.

[2] Nature :

• Receipts and Payments Account is an asset account as it is a summary of cash transaction. all items whether of capital or revenue nature are shown in this account.

• On the other hand, Income and Expenditure Account is a revenue account as it is like profit and loss account of profit seeking organisation. Only revenue incomes and expenses are taken into account while preparing this account.

[3] Object :

• The object of preparing Receipts and Payments Account is to find out cash or bank balance.

• On the other hand, the object of preparing Income and Expenditure Account is to find out the surplus or deficit of the period for which it is prepared.

[4] Side of Recording :

• Receipts are shown on the debit side and payments are shown on the credit side of the Receipts and Payment Account.

• On the other hand, income are shown on the credit side and expenses are shown on the debit side of the Income and Expenditure Account.