Question

What are steps to followed from priparing income and expenditure account from a receipt and payment account

Answer 1

Few steps should be kept in mind while preparing income and expenditure A/c from receipts and payment A/c
1) Exclude the opening cash and bank balance and similarly the closing cash and balances.
2)Eliminate all items of?capital?receipts and payments.
3)Exclude income of the previous period and any income received in advance.
4)Exclude expenditure of the previous or the coming period.
5)Include all incomes relating to the current period but not received as yet.
6)Include all expenditure relating to the current period but not paid as yet.
7)Provision for bad debts and depreciation on fixed?assets should be made and charged to income and expenditure account.