Difference between Income and Expenditure a/c and Profit & Loss a/c Class 12 CBSE Board

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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 DistinctionIncome and Expenditure AccountProfit & Loss Account
Objectivethe main objective is to ascertain excess of income over expenditure or vice versa during an accounting periodHere main objective to ascertain profit or loss during an accounting period.
Prepared byIt is generally prepared by a Non-profit organization.It is prepared by a business firm having a profit motive.
Basis of PreparationIt 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.
BalanceIts balance represents Surplus and Deficit.Its balance represents net profit or net loss.

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