Dynamic Tutorials and Services

Basis

Income and Expenditure Account

Profit and Loss Account

1. Prepared by

It is prepared by Not-For-Profit Organisation.

This account is prepared by business enterprises.

2. Object

The main object of Income and Expenditure Account is to ascertain excess of income over expenditure or excess of expenditure over income.

This account prepared by business enterprises.

3. Balance

The balance of this account is termed either as surplus or deficit.

The balance of this account is termed either as net profit or net loss.

4. Basis of Preparation

It is prepared from the receipts and payments account and additional information.

It is prepared from the trial balance and additional information.

5. Sharing of Surplus

Surplus is added in the capital fund and is not withdrawn by the members for their personal use.

Profit shown in this account is distributed among the owners and is withdrawn by them in the form of drawings.

Basis

Receipts and Payment Account

Cash Book

1. Basis

It is prepared on the basis of cash book

It is prepared on the bases of each receipt and payment.

2. Period

It is prepared at the end of the accounting year. It is a summary of the cash book.

It is written on a daily basis.

3. Date

Transactions under it are not written date wise.

Transactions are written date wise in the

cash book.

Basis

Receipts

Income

1.Capital and Revenue

Receipt can be a capital receipt or a revenue receipt.

But it is a revenue item only and is recorded in the income and expenditure account.

2. Period

It is the amount received during the year whether related to past, present or future years.

It is the amount received and receivable for the year.

3. Non-Cash Items

It related to cash items only.

It related to cash and non-cash earnings for the year.

4. Received amount

Any cash received is regarded as receipt.

Any cash received may or may not be regarded as income.

5. Side of the account

It is recorded on the debit side of cash book / receipts and 

payments account.

It is recorded on the credit side of income and expenditure account.

Basis

Payment

Expenditure

1

.Capital and Revenue

Payment can be a capital or a revenue Payment.

But it is a revenue item only and is recorded in the income and expenditure account.

2. Period

It is the amount paid during the year whether related to past, present or future years.

It is the amount paid and payable for the year.

3. Non-Cash Items

It related to cash items only.

It related to cash and non-cash expenses for the year.

4.Paid amount

Any cash paid is regarded as payment.

Any cash paid may or may not be regarded as expenditure.

5. Side of the account

It is recorded on the credit side of cash book / receipts and 

 payments account.

It is recorded on the debit side of income and expenditure account.