Question

How to prepare a income and expenditure account by using the given additional information.

Answer 1

1)Include all items of revenue receipts and expenses, on the respective side of the account.

2)Ensure that no items of capital incomes and expenses are included in this account.

3)Also, adjustment for amounts prepaid and outstanding, with respect to each item will have to be made.

4)Further, items included in receipts and payment account, depreciation, provisions, and profit or loss on sale of assets will have to be included in this account.

5)Finally, after putting down all items of revenue and expenses, you’ll get a balance. The resulting balance will then reveal the surplus or deficit for the period.