Income and expenditure account is prepared by Non-profit organization and profit and loss account is prepared by business firm.
However basis of preparation of both accounts is same. Both are prepared on the basis of accrual basis of accounting. Only income and expenses of revenue natures are recorded in it.
Difference between income and expenditure account and profit and loss account is only the presentation.
We have summarized few differences below.
Distinction between Income and Expenditure account and Profit & Loss Account class 12
|Basis of Distinction||Income and Expenditure Account||Profit & Loss Account|
|Objective||the main objective is to ascertain excess of income over expenditure or vice versa during an accounting period||Here main objective to ascertain profit or loss during an accounting period.|
|Prepared by||It is generally prepared by a Non-profit organization.||It is prepared by a business firm having a profit motive.|
|Basis of Preparation||It is prepared from the information extracted from receipts and payments account other information.||It is prepared on the basis of trial balance and other information.|
|Balance||Its balance represents Surplus and Deficit.||Its balance represents net profit or net loss.|