Distinguish between a "Receipts and Payments Account" and an "Income and Expenditure Account".

**Or**

From the following Receipts and Payments Account and additional information of a club, prepare an Income and Expenditure Account for the year ended on 31st December, 2017:

REC

Question

Distinguish between a "Receipts and Payments Account" and an "Income and Expenditure Account".

**Or**

From the following Receipts and Payments Account and additional information of a club, prepare an Income and Expenditure Account for the year ended on 31st December, 2017:

RECEIPTS AND PAYMENTS ACCOUNT for the year ended on 31st December, 2017

| Receipts | ₹ | Payments | ₹ |
|---|---|---|---|
| To Balance b/d: Cash and Bank | 4,000 | By Salaries | 14,000 |
| To Subscriptions: 2016 — 3,000; 2017 — 10,000; 2018 — 1,000 | 14,000 | By General Expenses | 3,000 |
| To Sale of Old Newspaper | 1,500 | By Electric Charges | 2,000 |
| To Misc. Receipts | 1,000 | By Newspapers | 3,500 |
| To Rent received from Club Hall | 40,000 | By Repairs of Carom Board | 6,000 |
| | | By Maintenance Expenses of Club Hall | 11,000 |
| | | By Balance c/d: Cash and Bank | 21,000 |
| | 60,500 | | 60,500 |

Additional Information:
(a) The club has 500 members and each paying an annual subscription of ₹25. Subscriptions outstanding on 31st December, 2016 were ₹3,000.
(b) Outstanding salary on 31st December, 2017 is ₹1,000.
(c) On 1st January, 2017 the club had Building ₹1,00,000, Furniture ₹20,000.
(d) Provide depreciation on Building and Furniture @ 10% p.a.

Accepted Answer

>

> [!TLDR]
> Receipts & Payments A/c summarises all cash flows; Income & Expenditure A/c records only current-year revenue items on accrual and shows surplus/deficit. (Or) The club's I&E Account shows a surplus of Rs 2,500.
>
> Distinction between Receipts and Payments Account and Income and Expenditure Account:
>
> | Basis | Receipts and Payments A/c | Income and Expenditure A/c |
> |---|---|---|
> | Nature | A summary of the cash book (a Real Account) | A nominal account like a Profit & Loss A/c |
> | Items recorded | All receipts and payments, whether capital or revenue | Only revenue incomes and expenses of the current year |
> | Period | Includes amounts relating to past, current and future years | Relates only to the current accounting year (accrual basis) |
> | Opening/closing balance | Begins and ends with cash/bank balance | Has no cash balance; the balance is surplus or deficit |
> | Purpose | Shows cash position | Shows whether there is a surplus or deficit |
>
> (Or) Income and Expenditure Account of the Club for the year ended 31 December 2017.
>
> Working notes: Subscription income for 2017 = 500 members x Rs 25 = Rs 12,500 (of which Rs 10,000 received, Rs 2,500 still outstanding); the Rs 3,000 of 2016 and Rs 1,000 of 2018 are excluded. Salaries = 14,000 paid + 1,000 outstanding = 15,000. Depreciation: Building 1,00,000 x 10% = 10,000; Furniture 20,000 x 10% = 2,000.
>
> | Expenditure | Rs | Income | Rs |
> |---|---|---|---|
> | To Salaries (14,000 + 1,000 o/s) | 15,000 | By Subscriptions (500 x 25) | 12,500 |
> | To General Expenses | 3,000 | By Sale of Old Newspaper | 1,500 | …

Receipts	₹	Payments	₹
To Balance b/d: Cash and Bank	4,000	By Salaries	14,000
To Subscriptions: 2016 — 3,000; 2017 — 10,000; 2018 — 1,000	14,000	By General Expenses	3,000
To Sale of Old Newspaper	1,500	By Electric Charges	2,000
To Misc. Receipts	1,000	By Newspapers	3,500
To Rent received from Club Hall	40,000	By Repairs of Carom Board	6,000
		By Maintenance Expenses of Club Hall	11,000
		By Balance c/d: Cash and Bank	21,000
	60,500		60,500

Basis	Receipts and Payments A/c	Income and Expenditure A/c
Nature	A summary of the cash book (a Real Account)	A nominal account like a Profit & Loss A/c
Items recorded	All receipts and payments, whether capital or revenue	Only revenue incomes and expenses of the current year
Period	Includes amounts relating to past, current and future years	Relates only to the current accounting year (accrual basis)
Opening/closing balance	Begins and ends with cash/bank balance	Has no cash balance; the balance is surplus or deficit
Purpose	Shows cash position	Shows whether there is a surplus or deficit

Expenditure	Rs	Income	Rs
To Salaries (14,000 + 1,000 o/s)	15,000	By Subscriptions (500 x 25)	12,500
To General Expenses	3,000	By Sale of Old Newspaper	1,500

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