InvestorQ : Distinguish between Receipt and Payment Account ana Income and Expenditure Account.
ETTABOINA RAJU made post

Distinguish between Receipt and Payment Account ana Income and Expenditure Account.

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riya Ranade answered.
4 months ago
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Receipts and Payments Account:
  • It is basically a summary of cash and bank transactions.
  • It records transactions that relate to both revenue and capital nature.
  • The debit side of receipts and payment account records receipts in cash and bank accounts.
  • The credit side of this account records the payment in cash through a bank account or cheque.
  • This account depicts the cash position of an NPO.
  • This account does not include non-cash items like depreciation, appreciation, etc.
Income & Expenditure account:
  • This account depicts the summary of income and expenses of the current year.
  • This account records transactions related to revenue nature only.
  • The debit side of this account records expenses and losses incurred in the current accounting period.
  • The credit side of this account records income and gains earned in the current accounting period.
  • This account mainly records the transactions related to the current period only.
  • This account shows the final/net result in terms of surplus or deficits due to the business activities during the year.
  • This account also includes non-cash items like depreciation, bad debts, provisions, etc. so that the actual profit of the organization could be ascertained.
Even though the purpose of both accounts appears to be similar, they differ on the basic levels. One account is to depict the actual cash/bank position, and the other is to depict the actual profit/loss position of the business.
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