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Answer» 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. |
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