Receipts and Payment account includes transaction of revenue and capital nature whereas Income and Expenditure account includes transaction of only revenue nature.

The Income and Expenditure Account is prepared for a not-for-profit organization to ascertain its surplus or deficit for a particular period. This account is specifically designed to record only revenue and expenses, excluding any capital transactions, such as capital receipts and payments.

Capital receipts involve transactions related to the organization's capital, such as donations towards the corpus fund or the sale of fixed assets. Similarly, capital payments include transactions concerning the acquisition or disposal of capital items, like the purchase of land or buildings.

On the other hand, the Receipt and Payment Account is a summary of cash and bank transactions, which includes both revenue and capital receipts and payments. Therefore, the Income and Expenditure Account is the appropriate account for evaluating the organization's operational performance by focusing solely on revenue and expenses.