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Question

What are the characteristics of income and expenditure accounts?


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Solution

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.

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