Explain the basic features of Income and Expenditure Account and of Receipt and Payment Account.

Explanation

The following square measure the essential options of financial gain and Expenditure Account


(i) Nature : it's a Nominal Account. it's like profit and loss account.

(ii) Basic of Recording : Basis for recording the transactions in each the case is analogous and recording of revenue expenditure revenue financial gain is that the solely concern of each the accounts. It means that there's no house for capital nature expenditure.

(iii) No house for Capital Transactions : The transactions those square measure capital in nature square measure excluded from this account. solely profit and loss on sale of assets is recorded during this account not the sale proceed.

(iv) Almost like Profit and Loss Account : Financial gain and Expenditure Account is analogous to the Profit and Loss Account the sole the distinction is that profit and loss account is ready for general organisation and financial gain expenditure account is ready for Not-for-Profit organisations.

(v) Current Year Transactions : Each the accounts records solely current year transactions. Transactions associated with previous year and future and excluded within the sort of changes.

(vi) Adjustments: numerous money and non-cash things like, outstanding expenses, postpaid expenses, financial gain received earlier, financial gain due however not received, depreciation, bad debts, etc. will be adjusted during this account.

(vii) Surplus or Deficit : The end result of financial gain and Expenditure Account comes within the sort of Surplus or Deficit. once financial gain exceed over expenditure it reflects Surplus and once Expenditure exeed over financial gain it reflects Deficit. the excess balance is additional to the capital fund in record and Deficit balance is subtracted from the capital fund within the record.
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