Key Differences Between R&P and I&E Accounting:

• R&P Accounting:

  • Simpler and based directly on bank transactions.
  • Records transactions when they occur, without adjustments for timing.
  • VAT is included in the total transaction amount.

• I&E Accounting:

  • More detailed, accounting for the timing of income and expenses.
  • For example, a £1,000 deposit received in November for a wedding next year would be recorded in the 2025/26 accounts, not 2024/25.
  • VAT is reported separately, affecting the figures in AGAR boxes.

Example of Accounting Impact:

• In R&P Accounting:
  • If you pay a £100 invoice plus £20 VAT (£120 total), the full amount appears in Box 6.
• In I&E Accounting:
  • Only the net amount (£100) appears in Box 6, with the VAT adjustment reflected in the other boxes.

• This difference also impacts boxes 7 and 8:

  • • In R&P, boxes 7 and 8 will always match (e.g., the bank balance).
    • In I&E, there’s usually a variance between boxes 7 and 8 due to VAT and adjustments.

Example Calculation:

1. Starting Bank Balance: £500
2. Payment Made: £120
   • R&P:
     • Box 7 and Box 8 both show £380 (remaining balance).
   • I&E:
     • Box 6 shows £100 (net), Box 7 shows £400 (adjusted), and Box 8 reflects the £380 bank balance (with a £20 VAT difference).