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Question 3 OR (c)

Receipts and Payments Account and Income and Expenditure Account

6 marks

Time to write: About 12 minutes
Topic: Not-for-profit organisations
Notes: Crux notes

Question

Question 3 OR (c) · 6 marks

Differentiate the receipts and payment account and the income and expenditure account.

Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.

Before you write

Read off the question and its marks

12 minfor 6 marks

Write it in this order

Read; underline the asks; jot your points 1 min
1 Seven bases of difference 6 marks 10 min
Check: every ask answered, key terms underlined 1 min

1

Try it first. About 12 minutes for 6 marks. Write it out, then open the solution.

Solution

Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.

#	Basis	Receipts and Payments Account	Income and Expenditure Account
1	Nature	A real account: a summary of the cash book	A nominal account, like a Profit and Loss Account
2	Items	All cash receipts and payments, capital or revenue	Only revenue income and expenditure
3	Period	Includes items of past and future periods if received or paid in cash	Only items of the current period, on the accrual basis
4	Opening balance	Starts with the cash and bank balance	Has no opening balance
5	Closing balance	Ends with the cash and bank balance (or overdraft)	Ends with a surplus or a deficit, taken to the capital fund
6	Non-cash items	Not shown (depreciation, outstanding expenses)	Shown (depreciation, outstanding and prepaid items)
7	Double entry	A summary of the cash book; not necessarily part of the double entry system	Necessarily part of the double entry system

The basis of rows 1 and 7 is the DU text's comparison of the two accounts; the others follow from the accrual basis on which the Income and Expenditure Account is prepared.

Where the 6 marks sit

#	Component	Marks
1	Seven bases of difference	6
	Total	6

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