Distinction between Receipts and Payments Account and Cash Book : Both receipts and payments accounts and cash book record cash transactions i.e., cash receipts and cash payments. Inspite of such similarity,
There are some differences between the two which are enumerated below:
| Basis of Distinction |
Receipts and Payments Account |
Cash Book |
| Basis |
It is prepared on the basis of cash book. |
It is prepared on the basis of each cash receipts and cash payments. |
| Period |
It is prepared at the end of accounting year. In other words, it is a summary of cash book. |
It is prepared on daily basis. |
| Part of double entry system |
It is merely a summary of cash book, it is not deemed to be a part of the double entry system. |
It forms part of double entry system. |
| Debit and credit sides |
It has receipts and payments sides instead of debit and credit sides. |
It has debit and credit sides. |
| Ledger folio column |
It has no ledger folio (L.F.) column. |
It has ledger folio (L.F.) column. |
| Institutions |
It is prepared by not for profit organisations. |
It is prepared by all organisations whether profit seeking or not for profit organisations. |
Distinction between Receipts and Payments Account and Income and Expenditure Account:
| Basis of Distinction |
Receipts and Payments Account |
Income and Expenditure Account |
| Nature |
It is a summary of the cash book. |
It is like a profit and loss account of a profit seeking entity. |
| Sides |
Debit side of this account records receipts and credit side records payments. |
Debit side of this account records expenses and losses and credit side records incomes and gains. |
| Type of account |
It is a real account. |
It is a nominal account. |
| Opening balance |
It starts with the opening balance of cash and bank. |
It has no opening balance. |
| Closing balance |
Closing balance of this account represents the closing cash in hand and at bank or overdraft at bank. |
Closing balance of this account indicates either excess of income over expenditure (surplus) or excess of expenditure over income (deficit). |
| Capital and revenue items |
It records receipts and payments both of capital and revenue nature. |
It records income and expenditure of only revenue nature. |
| Period of income and expenses |
It records all receipts and payments made during the year whether they relate to current, previous or next year. |
It records income and expenditure of the current year. |
| Adjustments |
Adjustments are not considered while preparing it, because it is prepared on cash basis of accounting. |
It is necessary to consider adjustments while preparing it, because it is prepared on accrual basis of accounting. |
| Balance sheet |
It need not necessarily be accompanied by a balance sheet because all revenue as well as capital items are included in it. |
Balance sheet must accompany this account because, it includes only revenue items, whereas the balance sheet contains the remaining balances. |
| Transfer of closing balance |
Closing balance of this account is transferred to the receipts and payments account of the next period. |
Closing balance of this account is transferred to the capital fund in the balance sheet. |
