Subject: Principles of Accounting
Income and expenditure is a nominal account which includes all revenue items. It is prepared same as profit and loss account i.e. on accrual basis. The difference of this account will represent surplus or deficit.
The features of income and expenditure a/c are as follows:
The following points are to be noted, while preparing the above account:
Surplus or deficit of a fixed period of time is ascertained through this account. So, it's heading will be:
Income and Expenditure Account for the year ended as on .............
Income and Expenditure Account is a Nominal Account. Hence, only revenue (no capital) items will find place in it.
Income and Expenditure Account
For the year ending on……………………………
Expenditure | Dr.Amt | Income | Cr.Amt |
Revenue Payment: |
XXX | Revenue Receipt: By Profit on sale of assets |
|
XXX | XXX |
Basis | Receipt & Payment Account | Income & Expenditure Account |
Account | It is a real account. | It is a nominal account. |
Nature | It includes both revenue and capital item. | It includes only revenue items. |
Basis | It is prepared on cash basis. | It is prepared on accrual basis. |
Opening | It starts with opening balance and ends with closing balance of cash. | It has no opening and closing balance. |
Period | It includes the actual cash receipt. | It includes only the income and expenditure of current year. |
Adjustment | Adjustments are not considered. | Adjustments are considered,. |
Points to be considered while converting receipt & payment account into income & expenditure account:
References:
Sharma, Narendra et.al., Principles of Accounting-XI, Bundipuran Prakashan, Kathmandu
Koirala, Yadav Raj et.al., Principles of Accounting-XI, Asmita Books Publication, Kathmandu
Shrestha, Dasharaha et.al., Accountancy-XI, M.K. Prakashan, Kathmandu
Features of Income & Expenditure Account
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