- Income & Expenditure Account (I&E a/c) is prepared for nonprofit (or non trading) organizations e.g. Trusts, NGO’s whereas Profit & Loss Account (P&L a/c) is prepared in profit oriented organizations, e.g. Limited companies, Partnership firms etc.
- Receipts and payment account is prepared before preparing I&E a/c whereas a Trial balance is prepared before preparing P&L a/c
- I&E a/c is prepared to know ‘Surplus’ (excess of income over expenditure) or ‘Deficit’ (excess of expenditure over income) whereas a P&L a/c prepared to know ‘Net profit’ or ‘Net loss’
- With regards to I&E a/c credit balance or ‘Surplus’ is added to opening capital fund and in P&L a/c Credit balance or ‘Net profit’ is added to opening capital.
- With regards to I&E a/c debit balance or ‘Deficit’ is deducted from opening capital fund and in P&L a/c debit balance or ‘Net loss’ is deducted from opening capital
- Major source of income in I&E A/c are subscriptions, donations and grants whereas the main source of income in P&L A/c are revenue generated from sale/service provided.