There are several points of difference between a receipt and payment account and an income and expenditure account. These differences fall under the following categories:
(1) Nature
Receipts and Payments Account : It is a summary of cash and bank
It is a summary of current year transactions.
Income and Expenditure Account: It is a summary of current year
transactions. income and expenses.
(2) Commencement
Receipt and payment account: It must start with the opening balance of cash brought over from the preceding period (if any).
Income and expenditure account: It does not start with any balance.
(3) Recording
All cash and cheque receipts are recorded on debit side of receipts and payments account where as all cash and bank payments are recorded on credit side. In income and expenditure account all expenditure of revenue nature are recorded on debit side and all incomes of revenue nature are recorded on credit side.
(4) Capital And Revenue Items
There is no distinction between capital and revenue receipts and payments in receipts and payments account. All expenses and incomes of revenue nature are recorded on accrual basis in income and expenditure account.
(5) Items Included
Receipt and payment account: It may include receipts and payments relating to the period immediately before or after.
Income and expenditure account: It must include only income and expense items belonging to the period under review.
(6) Balance Sheet Requirement
Receipts and payments account is not required to prepare balance sheet. Income and expenditure account is required to prepare balance sheet.
(7) Adjustments
No adjustments are required in receipts and payments account. In income and expenditure account adjustments are made because it is prepared on accrual basis.
(8) Placing of Items
Receipt and payment account: Receipts are shown on the debit side and payments on the credit side.
Income and expenditure account: If it is prepared in accounts form, all revenue appears on the credit side and expenditures on the debit side.
(9）Balance of Account
Receipt and payment account: The difference between receipts and payments represents the balance of cash in hand or at bank (or bank overdraft at the closing date).
Income and expenditure account: The difference between income and expenditure represents either surplus or deficit balance.
