Differences Between Receipt & Payment A/c and Income & Expenditure A/c

As the Receipts and Payments account is maintained under cash system, it serves the purpose of a cash book. The income and expenditure account considers only the items of revenue receipts and capital receipts. The main differences between Receipts & Payments Accounts and Income & Expenditure Accounts are follows:

Opening Balance: 

Receipt and Payment account starts with opening balance of cash in hand and at bank. But Income& Expenditure account there is no opening balance. 

Similarities: 

Receipt and Payment account is similar to cash book which is prepared by a business concern. Income & Expenditure account is similar to a profit and loss account of a business concern 

Periods: 

All receipts and payments whether relating to the current year, succeeding or preceeding year (s) are taken into consideration. Revenue incomes and expenditures concerning the current year only are taken into consideration. 

Sides of Account 

In Receipt and Payment account , cash receipts are recorded on the debit side and cash payments are recorded on the credit side of this account. In income & expenditure account, Incomes are shown on the credit side and expenditures are recorded on the debit side of this account. 

Capital Items 

In Receipt and Payment account , all capital receipts and payments in cash are included in this account. In income & expenditure account, all capital receipts and payments are excluded from this account. 

Adjustments 

In Receipt and Payment account does not make any adjustments regarding outstanding expenses, accrued incomes, prepaid expenses and income received in advance. But income & expenditure account adjust Outstanding expenses, accrued incomes, pre-paid expenses, and income received in advance of the current year are included and are to be adjusted. 

Closing Balance 

The closing balance of receipt and payment account represents balance of cash in hand and cash at bank or bank overdraft, as the case may be. But the closing balance of income & expenditure account represents either surplus or deficit. 

System of Accounting 

The receipt and payment account is prepared on the basis of cash system. But income & expenditure account is prepared on the basis of accrual or mercantile system.