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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4 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

  4. DEEPAK SHAH

    I AM A MEMBER OF NON TRADING ASSOCIATION STILL NOW I GOT THE 2 CAR PARKING FROM DEVELOPER SINCE 2003 AND I HAD DEPOSITED RECEIPT FOR THE SAME NOW ASSOCIATION ASKED ME TO LEAVE YOUR ALLOTTED CAR PARKING MY QUESTION IS THAT AT PRESENT NON TRADING ASSOCIATION LAW WAS TERMINATED SINCE 2005 NOW WHAT EVER THE ASSOCIATION WAS REGISTERED BEFORE 2005 WHAT IS THEIR CURRENT STATUS ? AND IF STILL THIS ASSOCIATION RAN ON TERMINATED LAW WHAT IS THE RESPONSIBILITY OF MANAGEMENT BODY WHETHER THEIR POWERS ARE REDUCE,AT PRESENT THEY COLLECT THE MAINTENANCE CHARGES FROM ALL MEMBERS BUT THEY ARE NOT ARRANGED AGM,ONLY AND ONLY SELECTED BODY ARE RULING OVER THE ASSOCIATION IN THIS SITUATION WHAT WILL I DO PLEASE GIVE ME YOUR ADVICE.

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