Pinned
For the sake of quality, our forum is currently "Restricted" to invitation-only. In case if you wish to join our forum, please send an email seeking an invitation to "[email protected]".
Lost your password? Please enter your email address. You will receive a link and will create a new password via email.
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
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
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.
See less2. All cash expenditures are payments. But all cash payments are not expenditure.