Difference Between Receipts And Payments And Income And Expenditure Account

Difference Between Receipts And Payments And Income And Expenditure Account

The main difference between receipt and payment account and income and expenditure account can be pointed out as follows:

1. Meaning

Receipt And Payment Account: Recording of cash and bank receipts and payments of the firm during the period.

Income And Expenditure Account: Recording of all cash and non-cash income and expenditure made by the firm during the period.

2. Account Type

Receipt And Payment Account: Real Account

Income And Expenditure Account: Nominal Account

3. Accrual Basis

Receipt And Payment Account: It does not follow the principle of accrual basis

Income And Expenditure Account: It strictly follows the principle of accrual basis

4. Purpose

Receipt And Payment Account: To show the closing balance (cash in hand or cash at bank).

Income And Expenditure Account: To show surplus or deficit.

5. Transaction Type

Receipt And Payment Account: Only cash and bank transactions are recorded

Income And Expenditure Account: Both cash transactions and non-cash transactions (which are of revenue nature) are recorded.

6. Requirement Of Balance Sheet

Receipt And Payment Account: Not required

Income And Expenditure Account: Required

7. Opening Balance

Receipt And Payment Account: Yes, it starts with opening balance.

Income and Expenditure Account: No, it has no opening balance

8. Similarity

Receipt And Payment Account: It is similar to cash book

Income And Expenditure Account: It is similar to profit and loss account

9. Double Entry System

Receipt And Payment Account: It ignores double entry system

Income And Expenditure Account: It follows double entry system

10. Compulsory

Receipt And Payment Account: It is not compulsory

Income And Expenditure Account: It is compulsory to prepare

11. Part Of Final Account

Receipt And Payment Account: No

Income And Expenditure Account: Yes

12. Based On

Receipt And Payment Account: Cash System

Income And Expenditure Account: Accrual System

13. Debit And Credit Items

Receipt And Payment Account: All cash and bank receipts are debited and payments are credited.

Income And Expenditure Account: Expenses and losses are debited and income is credited.

   Also Read

Advantages And Disadvantages Of Receipt And Payment Account

14. Adjustment Required

Receipt And Payment Account: Not required

Income And Expenditure Account: Required

Receipt And Payment Vs Income And Expenditure Account (Comparison Chart)

Basis For Difference	Receipts And Payment Account	Income And Expenditure Account
Introduction	Account that records all cash and bank receipts and payments	Account that records cash and non cash income and expenditure
Type	Real Account	Nominal Account
Accrual Basis	No	Yes
Purpose/Objective	To know closing balance	To know surplus/deficit
Type Of Transaction	Only cash transactions	Both cash and non cash
Balance Sheet Required?	No	Yes
Opening Balance	Yes	No
Similar To	Cash Book	Profit and loss account
Double Entry System	It ignores	It follows
Compulsory	No	Yes
Part Of Final Account ?	No	Yes
Based On	Cash Basis	Accrual Basis
Debit Items	Cash and bank receipts	Expenses or losses
Credit Items	Payments	Income
Adjustment Required	No	Yes

I hope this post is helpful to understand the difference between receipts and payments and income and expenditure account and to make comparison between them.