Difference between receipt and payment account and income and expenditure account

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on June 22, 2021

The main points of difference between receipt and payment account and Income and expenditure account may be described as under:

Nature:

Receipt and payment account: It is a summary of cash transactions.
Income and expenditure account: It is another name of income and expenses summary as adopted in non-trading concern.

Commencement

Receipt and payment account: It must necessarily commence with the opening ba!ance of cash brought over from the preceding period if any.
Income and expenditure account: it does not commence with any balance.

Items include

Receipt and payment account: It may include receipts and  payments pertaining to preceding or succeeding period
Income and expenditure account: lt must include only income and expense, belonging. to the period under review.

Capital and revenue items

Receipt and payment account: It includes both capital and revenue receipts & payment.
Income and expenditure account: It includes only income and expenditure of revenue nature.

Placing of items

Receipt and payment account: in 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 account form all revenue incomes appear on the credit side and expenditure on the debit side.

Balance of account

Receipt and payment account: The difference between receipts and the payments represents the balance of cash in hand or at bank or bank overdraft at the closing date.
Income and expenditure account: The difference of Income and expenditure represents either surplus or deficit balance.

Outstanding items

Receipt and payment account: It restricts itself to cash transactions only and does not take into account any outstanding Income or expenditure
Income and expenditure account: It includes all incomes 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 receipts and payments account is carried to the next period.
Income and expenditure account: The balance of income and expenditure account is not carried to the next period but is added in or deducted from the accumulated.

Balance sheet

Receipt and payment account: A receipts and payments account need not necessarily be accompanied by a balance sheet.
Income and expenditure account: An income and expenditure account must be accompanied by a balance sheet for the period concerned.

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