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Question
Explain any two features of Income and Expenditure account.
Solution
- Periodic Statement: The Income and Expenditure account is a financial statement that provides a comprehensive overview of an organization's revenue and expenses during a specific period, usually spanning one year. It offers a concise overview of the company's financial performance for that specific time frame, with a primary emphasis on revenue generated and expenses incurred, rather than assets and liabilities.
- Non-profit Organisation: Non-profit organisations, like clubs, societies, and charitable institutions, often rely on the Income and Expenditure account to monitor their financial activities. The Income and Expenditure account focuses on revenue sources such as donations, grants, membership fees, and fundraising activities. It also includes expenses that are aligned with the organization's mission and objectives.
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RELATED QUESTIONS
Income and expenditure contain only ______ items.
Justify either for or against by giving a reason for the following statement. ‘Income and Expenditure account shows the opening and closing balances of cash in hand and cash at bank.’
State any three points of difference between ‘Receipts and Payment Account’ and ‘Income and Expenditure Account’.
The closing balance of this account shows surplus/deficit ______.
How is Receipts & Payments Account different from Income & Expenditure Account?
It is a summary of all incomes and expenses of the current accounting year. It is prepared to know the surplus or deficit during the accounting year.
The closing balance of this Account shows surplus or deficit for the year.
This account is equivalent to the Profit and Loss Account of a business concern.
It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
State any one point of difference between Receipt and Payment account and Income and Expenditure Account.
