Question

Mention the important features of Income and Expenditure Account?

Answer 1

Answer:

Characteristics of Income and Expenditure Account

Non-trading concerns prepare this account.

It’s nature similar to the Profit and Loss Account as made by the for-profit concerns.

Though it is prepared at the end of the year, it does not mean that it shows a record of a whole year.

It determines the surplus or deficit of income over expenditures

The concern prepares this account by strictly following the Double Entry System.

The surplus or deficit of this account is transferred to the capital fund account.

Unlike the Receipts and Payments Account, it does not start with an opening balance and ends with a closing balance.

It strictly follows the accrual basis of accounting.

An independent auditor has to audit this account for the validation of the account.

Answer 2

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Characteristics of Income and Expenditure Account

Non-trading concerns prepare this account.

It’s nature similar to the Profit and Loss Account as made by the for-profit concerns.

Though it is prepared at the end of the year, it does not mean that it shows a record of a whole year.

It determines the surplus or deficit of income over expenditures

The concern prepares this account by strictly following the Double Entry System.

The surplus or deficit of this account is transferred to the capital fund account.

Unlike the Receipts and Payments Account, it does not start with an opening balance and ends with a closing balance.

It strictly follows the accrual basis of accounting.

An independent auditor has to audit this account for the validation of the account.