Question

In Income & Expenditure A/c prepared by professionals _____________.

• A. Income is determined on cash basis and expenditure on accrual basis
• B. Income and expenditure both are determined on accrual basis
• C. Either (A) or (B)
• D. None of the above

Answer 1

The correct option is B Income and expenditure both are determined on accrual basis

Income and Expenditure account is prepared to calculate the surplus or deficit of Non-profit organisations. This account is prepared on accrual basis. If this account is not prepared on accrual basis, it would not reflect the correct result. In one year.

it will show surplus and in another year it will show deficit. So, it is important to record all the expenditure and income relating to one year in the Income and Expenditure account of that year only. That's why in Income and Expenditure Account prepared by professionals income and expenditure both are determined on accrual basis.