In the Income and expenditure account it reflects the income of a year, it is always shown on the right side and whereas for the expenditure it is shown on the left side.
Income and expenditure accounts are generally prepared by the non-profit agencies such as a charity firm, any organization which is working for the social welfare not does not have the motto to earn profit but to serve only.
Income and expenditure is pretty similar to the profit and loss account that a company maintains whose motto is to earn profit and to find out the excess or deficit as the case may be.
The Receipts and Payments Accounts are prepared for those companies or entities who carry their business on cash basis only their transactions are exclusively on cash bases.
Receipts and Payments method is a simpler format to record transaction, they do not believe on the transaction which rely on future say for suppose that as compare to other they do not purchase or sale their commodities on account basis, it is dealt only on cash.
The Receipts and Payments Account is formatted as it is prepared with a T shaped format in which two sides are of concern one for the debit and one for the credit, the debit is on the right hand whereas the credit on the left hand side.
The cash receipt are on the debit side and the cash payments that are made to parties are maintained at credit side.
There are some features regarding the preparation of receipts and payments accounts and income and expenditure account which are discussed as follows:
One of the major and I believe it is the main feature that the receipts and payments account is totally rely on the cash base method it does not deal with accrued and prepaid expenses.
The receipts and payments account is usually classified as the summary of cash book
In the receipts and payments account it shows the opening balance that is known as cash in hand or bank or bank overdraft on the payment side.
The income and expenditure either it is on the debit side or credit side
But in the cash of income and expenditure which is generally known as the summary of profit and loss account it does not have any opening or closing balance at all.
The whole receipts and payments accounts whether it is capital or revenue by nature are included in this account.