Question

Give five differences between Profit and Loss Account and Income and Expenditure Account. 

How does Income and Expenditure Account differ from Profit and Loss Account?

Answer 1

S. No.	Basis of Distinction	Profit and Loss Account	Income and Expenditure Account
1.	Object	The main object of Profit and Loss Account is to calculate the net profit or net loss.	The main object of Income and Expenditure Account is to ascertain surplus (excess of income over expenditure) or deficit (excess of expenditure over income).
2.	Nature of Organisations	This account is prepared by trading organisations which seek to earn profit.	This account is prepared by non-trading organisations which do not seek to earn profit.
3.	Method or Basis of preparation	This account is prepared on the basis of the Trial Balance.	This account is prepared on the basis of Receipts and Payments Account and other information.
4.	Balance	The balance of this account shows net profit or net loss.	The balance of this account shows surplus or deficit.
5.	Contents	This account does not contain such items.	This account contains items like subscriptions and donations.