Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 15 - No. 16)
Which of the following is a fundamental difference between the income and expenditure account and the receipts and payments account?
The income and expenditure account is used for profit-making entities only.
The receipts and payments account is based on the cash basis and the income and expenditure account on the accruals basis.
The receipts and payments account is only concerned with income, the other with expenditure.
The income and expenditure account is a type of cash book.
Explanation
The receipts and payments account uses the cash basis, while the income and expenditure account uses the accruals basis.
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