RECEIPTS AND PAYMENTS

METHOD OF CONVERSION OF RECEIPTS AND PAYMENTS ACCOUNT INTO INCOME AND EXPENDITURE ACCOUNT
At first, Receipts and Payments Account is prepared by analyzing the Cash Book — subsequently, :ome and Expenditure Account is prepared in the following manner:
2. 3.
4.
Exclude the opening and closing balances of Receipts and Payments Account,
Exclude all the capital items.
Exclude all revenue items relating to last or next year.
5. (NTS:
Include all items of income or expenditure relating to the current year, if they are not received or paid in the current year.
Charge depreciation on all wasting assets.
While preparing Income and Expenditure Account from Receipts and Payments Account apply the (fcUowing two rules;
Exclude all capital items.
Adjust all revenue items with outstanding and advance items in the following manner:(i) If relates to current year: Add
(ii) If relates to last or next year: Deduct.
DISTINCTION BETWEEN RECEIPTS AND PAYMENTS ACCOUNT AND INCOME AND
EXPENDITURE ACCOUNT
Non-profit-seeking institutions repair the above two accounts and submit them at the annual general for the information of the members. There are sharp differences between the two accounts. It general Receipts and Payments Account may be called abridged Cash Book — all the cash transactions of pe whole year are recorded in it in a summarized form. On the other hand, the Income and Expenditure -,;count may be compared with the Profit and Loss Account of a business concern. These two accounts are-prepared on the same lines.
The points of distinction between Receipts and Payments Account and Income and Expenditure Account are given below in Tabular form:
Receipts & Payments Account
Income & Expenditure Account
It is a summarized statement of all cash transactions during an accounting year.
It is the account of revenue income and revenue expenditure of an accounting year.