Difference Between Receipt and Payment Account and Income and Expenditure Account

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on September 16, 2021

There are several points of difference between a receipt and payment account and an income and expenditure account. These differences fall under the following categories:

  • Nature
  • Commencement
  • Items included
  • Capital and revenue items
  • Placing of items
  • Balance of account
  • Outstanding items
  • Carrying of balance
  • Balance sheet

In the rest of this article, an overview is given of each of these areas.

Nature

Receipt and payment account: A summary of cash transactions.

Income and expenditure account: Another name for an income and expenses summary, as adopted in non-trading concerns.

Commencement

Receipt and payment account: It must start with the opening balance of cash brought over from the preceding period (if any).

Income and expenditure account: It does not start with any balance.

Items Included

Receipt and payment account: It may include receipts and payments relating to the period immediately before or after.

Income and expenditure account: It must include only income and expense items belonging to the period under review.

Capital and Revenue Items

Receipt and payment account: It includes both capital and revenue receipts and payments.

Income and expenditure account: It includes only the income and expenditures of revenue nature.

Placing of Items

Receipt and payment account: Receipts are shown on the debit side and payments on the credit side.

Income and expenditure account: If it is prepared in accounts form, all revenue appears on the credit side and expenditures on the debit side.

Balance of Account

Receipt and payment account: The difference between receipts and payments represents the balance of cash in hand or at bank (or bank overdraft at the closing date).

Income and expenditure account: The difference between income and expenditure represents either surplus or deficit balance.

Outstanding Items

Receipt and payment account: Restricted to cash transactions only and does not consider outstanding income or expenditure

Income and expenditure account: Includes all income (whether received or not) and all expenses (whether paid or not) relating to the period under review.

Carrying of Balance

Receipt and payment account: The balance of the account is carried to the next period.

Income and expenditure account: The balance of the account is not carried to the next period. Instead, it is added to or deducted from the accumulated amount.

Balance Sheet

Receipt and payment account: This account does not have to be accompanied by a balance sheet.

Income and expenditure account: This account must be accompanied by a balance sheet for the period concerned.

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