Question

State the differences between Receipts and Payments Account and Income and Expenditure Account.

Answer 1

S. No.	Basis	Receipts and Payments Account	Income and Expenditure Account
1.	Purpose	It is prepared to know the cash receipts and cash payments.	It is prepared to know whether there is an excess of income over expenditure or an excess of expenditure over income during the current period.
2.	Nature of account	It is a real account. It is a summary of the cash account. Cash receipts are recorded on the debit side and cash payments are recorded on the credit side.	It is a nominal account. It is similar to P and L A/c. Expenses are recorded on the debit side and income are recorded on Cr. side.
3.	Basis of accounting	It is based on a cash system of accounting. Non-cash items are not recorded.	It is based on the accrual system of accounting. Non-cash items like O/s expenses and depreciation also recorded.
4.	Opening and closing Balance	It commences with an opening balance of cash and bank and ends with a closing balance of cash and bank.	There is no opening balance. It ends with a surplus or deficit.
5.	Nature of items	It contains actual receipts and payments irrespective of revenue or capital items in nature.	It contains only revenue items, that is, only revenue expenses and revenue incomes.
6.	Balance sheet	No balance sheet is prepared along with this.	Balance sheet is prepared along with this.