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  1. This answer was edited.

    First, let me help you interpret the difference between Receipts & Income along with the help of an example. Difference between Income & Receipts  Income Receipts Income refers to the amount received by an entity from its core business operations and day to day functioning. Any cash inflow rRead more

    First, let me help you interpret the difference between Receipts & Income along with the help of an example.

    Difference between Income & Receipts 

    IncomeReceipts
    Income refers to the amount received by an entity from its core business operations and day to day functioning.Any cash inflow received by an entity can be termed as receipts.
    All incomes affect the statement of profit & loss.But all receipts do not affect profit & loss statement.
    Income includes only revenue receipts.

     

    Receipts include both capital receipts & revenue receipts.
    It can be cash or non-cash in nature. For eg. non-cash items such as an unrealized gain from investments, profit on revaluation of fixed assets are also considered as income.It is only cash in nature.

    Examples of Receipts & Income

    For instance, XYZ Inc. receives the following amount in the month of January 20×1. Let us differentiate the following transactions as receipts or income.

    1. Borrowed 50,000 from a bank for establishing a new unit.
    2. Amount of 10,000 received from the disposal of an old machine.
    3. Amount of 600,000 received from the issue of new shares & debentures of XYZ Inc.
    4. 500,000 received as consideration for the sale of goods or services.
    5. Rent received 60,000 from the tenant.
    6. Interest & Dividend received 15,000 from investments in Amazon Inc.

    All the above examples can be termed as receipts but all of them cannot be termed as income. Only examples 4, 5, & 6 can be referred to as income for XYZ Inc.

    Eg. 1, 2, & 3 are capital receipts and will not affect the statement of profit & loss of XYZ Inc. Therefore they are termed only as receipts & not income.

    Whereas eg. 4, 5, & 6 are revenue receipts and will affect the profit & loss statement. Therefore, they can be referred to as income for XYZ Inc.

    Now moving forward, let me help you understand the difference between payments & expenditure, with the help of an example.

    Difference between Payments & Expenditure

    ExpenditurePayments
    Expenditure refers to the amount incurred by an entity for operating the business and for earning income.Any cash outflow incurred by an entity can be termed as payments.
    All expenses affect the statement of profit & loss.But all payments do not affect profit & loss statement.
    Expenditure includes only revenue expenditure.

     

    Payments include both capital expenditure & revenue expenditure.
    It can be cash or non-cash in nature. For eg. non-cash items such as depreciation, amortization, bad debts are also considered expenses.It is only cash in nature.

    Examples of Payments & Expenditure

    For instance, ABC Inc. incurs the following payments in the month of January 20×1. Let us differentiate these transactions as payments or expenditures.

    1. Paid 40,000 for the acquisition of new machinery.
    2. Paid 200,000 for the redemption of shares and debentures issued by ABC Inc.
    3. Repaid 45,000 amount of loan taken from the financial institution.
    4. Salary & Wages paid 100,000.
    5. Purchase of Raw materials 30,000.
    6. Professional fees paid 15,000.

    All the above examples can be referred to as payments by ABC Inc. but all of them cannot be termed as expenditures. Only examples 4, 5, & 6 can be referred to as expenditures for ABC Inc.

    Eg. 1, 2, & 3 are capital expenditures and will not affect the statement of profit & loss of ABC Inc. Therefore they are termed only as payments and not expenditures.

    Whereas eg. 4, 5, & 6 are revenue expenditures and will affect the profit & loss statement. Therefore, they can be referred to as expenditure for ABC Inc.

    Conclusion

    1. All cash incomes are receipts. But all cash receipts are not income.
    2. All cash expenditures are payments. But all cash payments are not expenditure.

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  1. This answer was edited.

    The differences between cost centre and cost unit are as follows: PARTICULARS COST CENTRE COST UNIT MEANING A cost centre refers to the costs incurred about any part of the organisation such as activities, different functions, service or production location, etc. These departments or functions do noRead more

    The differences between cost centre and cost unit are as follows:

    PARTICULARSCOST CENTRECOST UNIT
    MEANINGA cost centre refers to the costs incurred about any part of the organisation such as activities, different functions, service or production location, etc. These departments or functions do not affect the profit of the organization directly however, monetary costs are incurred to operate the same.Cost unit refers to the cost incurred on a measurable unit of product or service of the organization.
    FUNCTIONThe main function of a cost centre is to classify costs as well as track expenses.It functions as a standard of measure for making comparisons with other costs.
    COST MEASUREThe overall costs in a cost centre are gathered by the cost units. The unit of cost absorbs all the overhead costs.The overall costs are measured in terms of direct and indirect costs of tangible units.
     

    ASCERTAINMENT

    It is determined through the efficiency of operations, services provided to the customers, organizational structure, size, technique of production etc.It is determined as per the final products and trade practices. However, it is strictly not restricted to the same.
    RANGEEven if a single product or service is provided there are a lot of cost centres.Every individual product or service has a different cost unit.

     

     

     

    EXAMPLES

    A company’s IT, accounting, Research and development department, manufacturing activities, customer services, etc. Automobile industry – no. of vehicles, gas – cubic metre, education – student year, etc.

     

    Hope this helps.

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  1. This answer was edited.

    Sure, NK Designer, I would like to share the important key differences between Assets and Inventory. I hope this will help you in understanding and analyzing the concept better. Difference between Assets and Inventory- S.No. Basis of Difference Assets Inventory 1. Meaning Asset refers to the economiRead more

    Sure, NK Designer, I would like to share the important key differences between Assets and Inventory. I hope this will help you in understanding and analyzing the concept better.

    Difference between Assets and Inventory-

    S.No.Basis of DifferenceAssetsInventory
    1.MeaningAsset refers to the economic resources that are owned or controlled by an entity or business for deriving short-term and long-term future benefit.Inventory refers to the set of finished goods (or) raw materials used for manufacturing goods to sell them in the market.
    2.TypesAssets are classified into two types namely- Fixed and Current assets. Fixed Assets are further classified into Tangible and Intangible Assets.Inventory is classified into 3 types namely- Raw Materials, Work In Progress and Finished Goods.
    3.Period/DurationFixed Assets are kept in the business for a longer period whereas Current Assets are kept in business for a short period but they are not meant for immediate sale.Inventory is not kept in the business for a longer period. They are meant for immediate sale to generate revenue.
    4.ScopeAssets have a broad scope because they remain in the business for both long-term (Fixed Assets) and short-term (Current Assets).Inventory has a narrow scope because they are quickly converted into revenue by selling them.
    5.Key featuresi) Price (or) value.

    ii) Generates revenue for a longer period.

    iii) Maintenance cost.

    iv) Highly Durable.

    v) Subject to Depreciation.

    i) High liquidity

    ii) Readily accessible to end-users.

    iii) Contributes to working capital management.

    iv) Creates seasonal demand.

    v) Economies of scale.

    6.Methods of Valuationi) Cost Method.

    ii) Base Stock Method.

    iii) Fair value Method.

    iv) Standard Cost Method.

    i) FIFO Method.

    ii) LIFO Method.

    iii) Simple Average Method.

    iv) Weighted Average Method.

    7.Examplesi) Plant and Machinery.

    ii) Furniture.

    iii) Bills Receivables.

    iv) Sundry Debtors.

    v) Patents and Trademarks.

    i) Aluminium and steel for manufacture of utensils.

    ii) Flour for bakery production.

    iii) Crude oil for refineries.

    iv) Cotton for cloth production

    8.PresentationAll Assets are shown in the balance sheet on the assets side as a non-current and current asset.Inventory is shown on the credit side of the trading account and under the head current assets in the balance sheet.

     

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