Income and expenditure account and profit and loss account both are prepared for finding net profit or net loss of organisation. Both are showing all the revenue expenditures and incomes for the year. But there are some fundamental differences between both which we are explaining with following basis.
|Basis of Difference|
Income and Expenditure A/c
| Profit and Loss A/c|
|1. Definition||Income and expenditure account is account which is prepared for finding the excess of income over expenditures or excess of expenditures over incomes.||Profit and loss account is the account which is prepared for finding net profit or net loss.|
|2. Not for Profit organisation or Business|
Income and expenditure account is prepared by not -for profit organisation whose aim is not to earn money.
Profit and loss account is prepared by business whose aim is to earn money.
|3. Basis of Preparation ||Income and expenditure account is prepared on the basis of receipt and payment account and some other information||Profit and loss account is prepared on the basis of trial balance and some other information.|
|4. Balance of Account||When we compare debit and credit side of this account, balance will be surplus or deficit.|
The balance of profit and loss account will be net profit or net loss.