Question

Sale of crockery (book value Rs.220)-Rs.280.What amount will be posted in the Income and Expenditure account ?

• A. Rs. 60
• B. Rs. 220
• C. Rs. 280
• D. Rs. 500

Answer 1

The correct option is A Rs. 60

Income and expenditure is a nominal account. It records any gain, revenue, expenses, losses that occur in the current period and not the cash inflow or outflow.

In the given question sale of crockery is for Rs-280 book value being Rs-220. The profit on sale of crockery is sale value-book value which is Rs-60 (280-220). Rs-60 will be recorded in income and expenditure account as profit on sale of crockery and Rs-280 will be recorded in receipts and payments account as receipts.