Income and Expenditure Account

What isΒ Income and Expenditure Account?

The income and expenditure account is prepared by the non-trading entities to determine surplus or deficit of income over expenditures for a particular time frame. The accumulated or accrual concept of accounting is rigidly pursued while preparing income and expenditure a/c of non-trading concerns. It is prepared as a portion of final accounts of non-trading entities and is equal to the profit and loss account outlined by for-profit business entities.

Income and Expenditure Account format

Features of Income and Expenditure Account

Below mentioned are the characteristic features of Income and Expenditure Account :

  • Income and expenditure account presented by non-trading entities are much like the profit and loss a/c presented by trading entities.
  • It is prepared by stringently following the fundamentals of the double-entry system of bookkeeping or accounting.
  • It is always prepared during the end of the period which normally comprises of 1 year.
  • It decides the surplus or deficit of income over expends of the non-trading entities for the particular year.
  • The surplus or deficit from the income and expenditure account is moved to the capital fund a/c.
  • The Income and expenditure account of only revenue nature are incorporated in this account. Any income and expenditure of capital nature are not comprehended.
  • It is prepared by accountants chosen by the enterprise’s management and is audited by an independent auditor.
  • It does not begin with the opening balance, and it follows back the incomes received and expenditures incurred by the non-trading entities during the financial year.
  • The accumulated or accrual concept of accounting is rigidly pursued when it is prepared.
Important Topics in Accountancy:

The above mentioned is the concept that is explained in detail about Income and Expenditure Account for the Class 12 students. To know more, stay tuned to BYJU’S.

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  1. Wow very nice concept πŸ‘ŒπŸ€—β˜οΈπŸ‘†πŸ‘ŒπŸ‘ŒπŸ‘ŒπŸ₯°πŸ€©πŸ˜»πŸ˜πŸ‘πŸ‘β˜ΊοΈπŸ™‚πŸ™ƒπŸ˜Šit is really too good for all competitive exams πŸ‘ˆ and board examination

  2. Very useful
    πŸ™‚

  3. Very nice explained