Question

What are the characteristics of income and expenditure accounts?

Answer 1

Qualities of Income and Expenditure Account

• Non-trading concerns set up this record.

• Its nature is like the Profit and Loss Account as made by the revenue-driven concerns.

• However, it is prepared toward the year’s end, it doesn’t imply that it shows a record of an entire year.

• It decides the profit or losses of income over expenditure.

• The organization readies this record by rigorously following the Double Entry System.

• The excess or deficiency of this record is moved to the capital fund account.

• In contrast to the Receipts and Payments Account, it doesn’t begin with an initial offset or opening balances and finishes with an end balance.

• It rigorously follows the accrual basis of bookkeeping.

• An independent auditor needs to review this record for approval of the account.

Also see:

• Income and Expenditure Account
• Difference Between Capital Expenditure and Revenue Expenditure
• Classification of Expenditure

Stay tuned to BYJU’S to learn similar Commerce Questions.