Question

Write five differences between Receipts and Payments Account and Income and Expenditure Account.

Answer 1

Distinction between Receipts and Payments Account and Income and Expenditure Account.

Basis of Distinction	Receipts and payments Accounts	Income and Expenditure Account
1. Nature	It is a summary of cash receipts and cash payments.	It is like the profit and loss Account of a trading concern.
2. Type of Account	It is a real account	It is a nominal account
3. Objective	It is prepared to know cash balance at the end of the year.	It is prepared to ascertain surplus at the end of the year.
4. Nature of Items	It contains both Capital and revenue items.	It contain only revenue items.
5. Opening Balance	It starts with the opening balance of cash in hand and at bank.	It has no opening balance.
6. Closing Balance	Its balance at the end shows the cash in hand and at bank (or overdraft) at the end of the year.	Its balance at the end shows the surplus or deficit for the year.
7. Accrued/ outstanding Items	It contains only cash items and does not include accrued income, income received in advance, outstanding or prepaid expenses	It is prepared on accrual basis and therefore includes all accrued and outstanding items.