Question

Which of the following is to be recorded in an Income and expenditure account ?

• A. Purchase of a fixed asset
• B. Capital expenditure incurred on a fixed asset
• C. Profit on the sale of a fixed asset
• D. Sale of a fixed asset

Answer 1

Answer: (C)

Profit on the sale of a fixed asset

Income and expenditure account records all those transactions which are of capital nature, that is, they affect the capital.

Out of all only profit and loss are of capital nature and hence have to be recorded in income & expenditure account.