POSTAGE HAVE WHICH A/C INCOME OR EXPENDITURE
Answers
Answer: The role of a non-trading firm is to provide services to its members. However, in order to do the same, it needs to earn some revenue and incur certain expenditures. When a non-profit firm does so, it needs to prepare an income and expenditure account, which can help it in ascertaining the surplus earned or deficiency incurred during a period. Let us understand more about the income and expenditure account which is prepared by a non-profit organization
The Income and Expenditure Account is a summary of all items of incomes and expenses which relate to the ongoing accounting year. It is prepared with the objective of finding out the surplus or deficit arising out of current incomes over current expenses. It is quite similar to the Trading and Profit and Loss Account of a trading concern and is prepared in an exact manner.
Income and Expenditure Account is prepared on an accrual basis. All incomes and expenses relating to the accounting year, whether they are actually received and paid or not, are taken into consideration. Expenditure is recorded on the debit side and income is recorded on the credit side. A distinction is made between capital and revenue items and only revenue items are included in this account.
Income and Expenditure Account is a nominal account. Therefore, the rule of nominal account (debit all expenses and losses and credit all incomes and gains) is followed while preparing it. While preparing the account, only items of revenue nature are recorded and all items of capital nature are ignored. For example, the profit earned or loss suffered on the sale of an asset will be recorded in it but the amount received from the sale of an asset will not be recorded in it.
The closing balance of this account shows a surplus or deficit for the year. If the credit side exceeds the debit side, there is surplus. On the other hand, if the debit side exceeds the credit side, there is a deficit. The surplus is added to the Capital Fund while the deficit is deducted from the Capital Fund.
PLEASE MARK IT AS BRAINLIEST
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