Receipts and Payments And Income and Expenditure Accounts

Receipts and Payments Account

The receipt and payment account is the summary of payments and receipts of an organization during an accounting period. It gives a picture of the cash position of the organization. It records all cash and bank transactions of both capital and revenue nature and does not include any non-cash transactions. Receipts and payments account starts with the opening cash balance and closes with the cash balance at the end of the period.

The advantages of a receipts and payments account are-

1. It shows the total receipts or payments made by an organization during a period of time.
2. It can be used to verify the cash book of an organization as it records all the cash transactions.
3. It creates a base for the preparation of an income and expenditure account.
   

Income and Expenditure Account

This account records all the incomes and expenses of the non-profit organization.  All income-related expenses are recorded at the debit side of the account and all income is recorded on the credit side of the account. The balancing figure of the account represents the organization’s surplus or deficit.

Advantages of Income and Expenditure account are:

1. It helps in determining the revenues of the Company and also determines the surplus or deficit of an organization.
2. It helps in controlling the expenses of the Company.
3. It helps in determining the profit and losses of the organization.
4. Helps the investors in taking the decision of further investment or not by showing the profit and losses of the Company.

The difference between the revenue and payments account and the Income and Expenditure account are as follows:

1. Revenue and payments account is the summary of cash and bank transactions of an organization during a period of time whereas the Income and expenditure account is the summary of current year income and expenses.
2. Receipt and payments account to record all transactions regardless of their nature whether Capital or Revenue whereas Income and Expenditure account records only revenue nature transactions.
3. In revenue and payments accounts, the debit side records all the cash and bank receipts of an organization, and the credit side records payments of an organization whereas in Income and Expenditure accounts, the debit side records all the expenses and losses and the credit side records all the income and gains of the organization.
4. Revenue and payments account is a real account whereas the Income and Expenditure Account is a nominal account.
5. Revenue and payments account depicts the cash position of the organization whereas the Income and Expenditure account shows the profit and loss of an organization
6. The income and payment account is prepared on the basis of cash accounting while the income and expenditure are prepared on an accrual basis.
7. Balancing the figure of revenue and expenditure account is the closing balance of cash in hand and cash at the bank whereas balancing the figure in the Income and expenditure account is either surplus or deficit of an organization.