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 cash basis
  • C records transactions that relate to the period on accrual basis
  • D accounts for balance of cash at bank

The correct answer is B. records transactions that relate to the period on cash basis

Receipts and payments 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.

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