How will you convert the receipts and payment account into an income and expenditure account
Answers
Explanation:
If the points of difference between receipt and payment account and income and expenditure account have been understood, it should be a simple matter to convert a receipt and payment account into an income and expenditure account. As a general guide, the following steps should be carefully followed to convert the receipt and payment account to an income and expenditure account.
1.Exclude the opening cash and bank balance and similarly the closing cash and balances.
2.Eliminate all items of capital receipts and payments.
3.Exclude income of the previous period and any income received in advance.
4.Exclude expenditure of the previous or the coming period.
5.Include all incomes relating to the current period but not received as yet.
6.Include all expenditure relating to the current period but not paid as yet.
7.Provision for bad debts and depreciation on fixed assets should be made and charged to income and expenditure account.