What is Income and Expenditure Account?
The income and expenditure account is outlined by the non-trading entities to determine surfeit or deficit of income over expenditures for a particular time frame. The accumulated or accrual concept of accounting is rigidly pursued while outlining income and expenditure a/c of non-trading concerns. It is outlined 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.
Features of Income and Expenditure Account
Below mentioned are the characteristic features of Income and Expenditure Account :
- I and E a/c outlined by non-trading entities are much like the profit and loss a/c outlined by trading entities.
- It is outlined by stringently following the fundamentals of double-entry system of bookkeeping or accounting.
- It is always outlined during the end of the period which normally comprises of 1 year.
- It decides the surfeit or deficit of income over expends of the non-trading entities for the particular year.
- The surfeit or deficit from the income and expenditure account is moved to the capital fund a/c.
- The I and E a/c 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.
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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.