Difference Between Receipts and Payments Account and Income and Expenditure Account: Learning Objectives: 1.

What is the difference between receipt and payment account and income and expenditure account? Receipts & Payment Account 1 It is a summary of the cash book Income & Expenditure Account 1 It takes the place of profit and loss account in non-trading concerns. 2 Does not commence with any balance It includes re!enue items only

2 It begins with an opening balance and ends with a closing balance. It records all sums recei!ed and paid whether they relate to re!enue or capital items " It include all sums actually recei!ed during the year whether they relate to the past# current or next year. % &he receipts are shown on the debit side and the payments on the credit side. ' It simply ends with a closing balance of cash and does not show the result for the period. ( It is not accompanied by a balance sheet.

" It includes the items relating to year for which it is prepared. $ro!ision is made for all outstanding expenses and accrued income. % Income is shown on the credit side and expenses on the debit side. ' It definitely shows whether there has been an excess of income o!er expenditures or !ice !ersa. ( It is always accompanied by a balance sheet.

Difference/Distinction Between Receipts And Payments Accounts And Income And Expenditure Account Append below are the main differences/distinction between:

Receipts & Payments Account Receipts are shown on debit side and payment shown on credit side Starts with the opening balance of cash in hand and at ban !nly cash transactions ta es place "apital as well as re#enue items appear $he difference of two sides is the cash in hand and at ban at the end of the periods All receipts and payments are shown irrespecti#e of the year to which they relate

Income & Expenditure Account Expenses are shown on debit side and Incomes are shown on credit side It has no opening balance !ther transactions also ta e place !nly re#enue items appear

$he difference between is surplus or deficit for the period

either

!nly those expenses and incomes are shown which related to the period for which the account is prepared

Concept Of Receipts And Payments Account, Its Features And Limitations Concept Of Receipts And Payments Account Receipt and payment account is a summary of cash receipts and payments during the accounting period. It records all cash receipts and cash payments including capital receipts and revenue revenue receipts irrespective of accounting period. All cash receipts are recorded on debit side or receipts side and all cash payments are recorded on credit or payments side of receipts and payments account. Features Of Receipts And Payments Account The essential features of receipts and payments account are as follows: 1. Summary f !as" #ransactions

All cash receipts and payments made by the concern during the accounting period are recorded in this boo . !herefore, receipts and payments account can be ta en as a summary of cash transactions. $. !as" And Ban% Items In ne !o&umn

All receipts either cash or ban are recorded in receipts column of receipts side "here all cash and ban payments are recorded in one column of payment column of receipts and payments account. !he cash and ban transactions are merged to avoid contra entries of cash and ban transactions. '. (o Distinction Between !apita& And Re)enue All cash receipts and cash payments irrespective of capital and revenue nature are recorded in receipts and payments account. #o distinct is made for capital receipts , revenue receipts, capital e$penditures and revenue e$penditures. *. penin+ And !&osin+ Ba&ance f !as"

Receipts and payments account starts from opening balance of cash and ban ends "ith the

closing balance of cash and ban . ,. Recordin+ f !as" Receipts And Payments

All cash and che%ue receipts are recorded on debit side "here as all cash and che%ue payments are recorded on credit side of receipts and payments account. -. I+nores (on.cas" #ransactions Receipts and payments account does not record non&cash transactions. Limitations Of Receipts And Payments Account The receipts and payments accounts suffers from the following limitations' (. Receipts and payments account does not differentiate capital and revenue e$penses and incomes. ). Receipts and payments account fails to sho" e$penses and incomes on accrual basis. *. Receipts and payments account fails to sho" surplus and deficiency. +. Receipts and payments account fails to sho" non&cash transactions such as depreciation of fi$ed assets, pilferage etc.