The income and expenditure account differs from receipts and payments account because it?

A. accounts for notional charges
B. records transactions that relate to the period on a cash basis
C. records transactions that relate to the period on an accrual basis
D. accounts for balance of cash at bank

Correct Answer:

Option B – records transactions that relate to the period on a cash basis

Explanation

Receipt and payment account is a summary of cash transactions for a period and it is a real account. Income and expenditure account is a summary of expenditure and income like trading and profit and loss account and it is a nominal account.