Difference between receipt and payment account and income and expenditure account

The receipts and payments account and income and expenditure account differ from each other on the following grounds:

1. Cash and non-cash transactions

  • Receipt & payment a/c: It is prepared on a cash basis and only actual cash payments and receipts are reflected here.
  • Income & expenditure a/c: It is prepared on an accrual basis and includes both cash and non-cash transactions.
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2. Capital and revenue items

  • Receipt & payment a/c: Items of both capital and revenue nature are reflected here.
  • Income & expenditure a/c: Items of only revenue nature are reflected here.

3. Compulsory or not

  • Receipt & payment a/c: It’s preparation is not compulsory.
  • Income & expenditure a/c: Its preparation is compulsory.

4. Opening and closing balances

  • Receipt & payment a/c: It starts with an opening balance of cash in hand and cash at bank and ends with a closing balance of cash in hand and cash at bank. The closing balance of this account is carried forward to the next year’s receipts and payments account.
  • Income & expenditure a/c: It doesn’t start with an opening balance. The surplus or deficit balance shown by it is carried to the capital fund account of non-trading entity.

5. Preparation

  • Receipt & payment a/c: It is prepared using information from cash book maintained by the entity.
  • Income & expenditure a/c: It is prepared by using information from receipt and payment account and from other relevant sources.

6. Use of double entry system

  • Receipt & payment a/c: The double entry bookkeeping system is not followed while its preparation.
  • Income & expenditure a/c: Double entry bookkeeping system is followed strictly while its preparation.

7. Nature of account

  • Receipt & payment a/c: It is a summarized version of the cash book of the non-trading concern.
  • Income & expenditure a/c: It is a summary of the incomes and expenditures of the non-trading concern during a particular period.

8. Relevancy with accounting period

  • Receipt & payment a/c: It shows transactions irrelevant of their accounting period(s) which means transactions related to past, present or future periods can be shown here.
  • Income & expenditure a/c: It only reflects transactions relating to the current accounting period.

9. Importance and use

  • Receipt & payment a/c: It is not made part of the final accounts and is only used by the management for various purposes.
  • Income & expenditure a/c: It is made part of the final accounts and is accompanied by balance sheet of the non-trading concerns.
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3 Comments on Difference between receipt and payment account and income and expenditure account

  1. Johnson Daniel

    you teach me a leason that i will never for get

  2. Barkha

    I want to know about differences between cash account and income and expenditure account

  3. ANIL KUAMR

    how to paepare receipt a/c and payment a/c

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