Difference between Receipt & Payment Account and Income & Expenditure Account

Receipt and Payment Account:

Nature: Receipt and Payment Account is a summary of cash and bank transactions of a non-profit organization. It records all cash inflows and outflows, irrespective of whether they are revenue or capital in nature.

Opening Balance: The Receipt and Payment Account usually begins with the opening balance of cash and bank on the starting date of the accounting period.

Adjustment: It does not involve any adjustments for outstanding expenses, prepaid income, accruals, or depreciation. It only records actual cash and bank transactions during the accounting period.

Income and Expenditure Account:

Nature: Income and Expenditure Account is a summary of revenue and expenses of a non-profit organization. It records all revenue (income) and expenses (both revenue and capital) incurred during the accounting period.

Opening Balance: The Income and Expenditure Account does not consider the opening balance of cash and bank. It only includes revenue receipts and expenses for the current accounting period.

Adjustment: Unlike the Receipt and Payment Account, the Income and Expenditure Account includes adjustments for outstanding expenses, prepaid income, accruals, and depreciation. It aims to show the true revenue and expenses for the accounting period, regardless of the cash flow.

In summary, the main difference lies in their nature and purpose. Receipt and Payment Account deals with cash and bank transactions without any adjustments, while Income and Expenditure Account focuses on revenue and expenses, taking into account adjustments to present the true financial position of the non-profit organization.