Question

What is the nature of the Income and expenditure Account?

Options

• It is like profit and loss.

• It is the summary of the cash account.

• Both of these

• None of these

Answer 1

It is like profit and loss.

Explanation:

A profit and loss account is similar to an income and expenditure account. With the use of a Receipt and Payment Account, Not-for-Profit Organizations normally generate an Income and Expenditure Account and a Balance Sheet. This does not mean that they do not conduct a trial balancing. They also construct a trial balance to check the accuracy of the ledger accounts, which helps them prepare accurate Receipt and Payment Accounts, as well as the Income and Expenditure Account and the Balance Sheet.