The main difference between the two aspects
| Receipt & Payments | Income & Expenditure |
|---|---|
| (i) It includes capital receipt and capital payments. | (i) it excludes capital receipts and capital payments |
| (ii) It deals mainly on cash transactions of business. | (ii) it includes accounts and prepayments |
| (iii) Balance represents cash in hand, bank balance or of bank overdraft. | (iii) Balance represents surplus or deficit of income over expenditure for a particular period of time |
In receipt and payments account, we record only income or cash received, but we ignore all accrued income that has not been received; although we debit all expenditure whether paid or outstanding in the income and expenditure account.
In preparing income and expenditure account, all income on the debit side of receipt and. payment account are transferred to the credit side of the income and expenditure account and as well make adjustments for accruals and prepayment at the beginning and at the end of the period.