When it is desired to convert a receipts and payments account into an income and expenditure account, the following steps are taken : Leave the opening and closing balance of cash and bank given in the receipts and payments account. Solution. The accumulated or accrual concept of accounting is rigidly pursued while preparing income and expenditure a/c of non-trading concerns. Question Bank Solutions 14550. There is always distinction between capital and revenue of receipts and payments. with Bank are to be capital expenditure so will not entered in Income Expenditure Account.] Ask your question. 1_____ 2_____ Roshni117 Roshni117 23.07.2020 Accountancy Secondary School On the basis of Income and Expenditure Account ..... is prepared. In some countries, the income and expenditure statement is the not-for-profit equivalent of a for-profit company's income statement. (b) Insurance premium was paid … Income and Expenditure Account is prepared by a Non-trading concern while Profit and Loss Account is prepared … This has led to an increase in work, and therefore fee, for which the client sees no discernable benefit. Features of Income & Expenditure Account It’s nature similar to the Profit and Loss Account as made by the for-profit concerns. An income end expenditure account is merely another name for the expense and revenue summary of non-trading concern. The income statement displays the revenues, expenses, and resulting profit or loss of business. The income and expenditure account is prepared by the non-trading entities to determine surplus or deficit of income over expenditures for a particular time frame. It is confined to current accounting year only. (i) Receipts and Payments Account highlights total income and expenditure. It is prepared to find out the surplus or deficit pertaining to a particular year. Income and Expenditure Account INTRODUCTION. Income and Expenditure is just like profit and loss account of profit organisations. Log in. It shows whether total revenue for the year is more or less than the money spent. Explanation:On the basis of Income and Expenditure Account ..... is prepared. (c) Even if some expenditure relating to the period for which accounts are being prepared has not been actually paid for, it should be brought into books, and if it is of revenue nature should be debited to the Profit and Loss Account. How to Prepare Accounts for a Non-Profit Organisation. Cash received for current year is regarded only as income. Expenditure is recorded on the debit side and income is recorded on the credit side. Download CBSE Class 12 Accountancy Financial Statements of Not for Profit Organisations MCQs in pdf, Accountancy chapter wise Multiple Choice Questions free, 1. 3. Though it is prepared at the end of the year, it does not mean that it shows a record of a whole year. Take only revenue items of […] and loss account as an expense. Prepare Income and Expenditure Account for the year ending 31st March, 2017, on the basis of given Receipts and Payments Account for the year ending 31 March, 2017. Income and expenditure account is a summary of income and expenditure of a not–for–profit organisation prepared at the end of an accounting year. In some cases, the Receipts and Payments Account may also have to prepared. LMN Chess Club Income and Expenditure Account for the year ended 31 December 2016 Answer: (d) State two reasons why the closing balance in the receipts and payments account is different from the final figure in the income and expenditure account. Following is the Receipt and Payment Account of Indian Sports Club, prepared Income and Expenditure Account, Balance Sheet as on December 31, 2017: Receipts and Payments Account for the year ending December 31, 2017. However, the following differences may be noted: 1. The Income and Expenditure Account of a Non-trading concern is similar to profit and Loss Account of a Trading concern. 3,200 on December 31, 2017. 6. Question Papers 1789. The difference of this account will represent surplus or deficit. Other Information: Subscription outstanding was on December 31, 2016, Rs. (j) Debenture interest is payable after the payment of preference dividend but before the payment of … ADVERTISEMENTS: Here we detail about the six steps for preparation of income and expenditure account and balance sheet for non-profit organisation. in the case of a charity or a club, then an income and expenditure account is prepared. It determines the surplus or deficit of income over expenditures It is of revenue nature only. 1.3 Income and Expenditure Account The income and expenditure account is equivalent to the Profit and Loss Account of a business enterprise. Even though you have enabled the option to display Income/Expense Statement instead of P & L in F11: Accounting Features still Balance Sheet shows Profit & Loss A/c as per the actual ledger name. This is prepared on the lines of expense and revenue summary. Join now. (3) In Receipts and Payments Account there may be several items which are not recorded in the Income & Expenditure Account. Textbook Solutions 11268. To make an income statement, observe these steps: 1. Income and Expenditure Account is prepared on an accrual basis. Income and Expenditure account shows transactions of Capital nature for the accounting year. You need to rename the Profit & Loss A/c ledger to Income and Expenditure to reflect the same in … (c) Prepare the income and expenditure account for the year ended 31 December 2016. 32. Dec 14, 2020 - How to Prepare Income and Expenditure Account. Hence, many items appearing in the Receipts and Payments need to be adjusted. 11 June 2010 Income and expenditure account is prepared in case of trust or societies and in all other cases, profit and loss account is prepared to arrive at the profit or loss of the company. [Note: Books Purchased, Govt. Bonds, & F.D. Important Solutions 2834. Income and Expenditure Account. How to plan an income statement? CBSE CBSE (Arts) Class 12. From the following receipts and payments and information given below, Prepare Income and Expenditure Account and opening Balance Sheet of Adult Literacy Organisation as on December 31, 2017. (TRUE/FALSE) 2. Both are prepared on an accruals basis, as distinct from a receipts and payments account, prepared on a cash basis. Print trial balance. Hi-Jump Income and Expenditure Account for the year ended 31 December 2016 (e) Suggest two reasons why the managing committee continues to run the shop despite it making a loss. Definition. (h) Partners can share profits or losses in their capital ratio, when there is no agreement. The primary sheet is Income and expenditure template sheet that records the income, expenditure & savings information of a human being on a monthly base. Surplus or Deficit of a non-profit organisation is added to or subtracted from accumulated fund The Income and Expenditure Account is prepared on accrual basis with the help of Receipts and Payments Account along with additional information regarding outstanding and prepaid expenses and depreciation etc. Capital expenditure or expenditure relating to the past period or the future should be excluded. From the Following Particulars, Prepare Income and Expenditure Account: Concept: Income and Expenditure Account Based on Trial Balance. as on December 31, 2017 1. This account records all the income and expenditure of the non- trading concerns for an accounting year. Receipt and Payment Account. 31. It is credited to income and expenditure account. INCOME AND EXPENDITURE ACCOUNT Income and Expenditure Account is an account prepared by the non- profit organisations to find out the surplus of deficit of the non-trading concern. An item may be "income", even though cash has not been received. Characteristics of Income and Expenditure Account. We have historically prepared a client's accounts on an income & expenditure basis. Offer running on EduRev: Apply code STAYHOME200 to … Only items of revenue nature pertaining to the period of account are included therein. 0. It is an account which is widely adopted by non-profit making concerns and is prepared by following accrual principle. Prepare Income and expenditure account for the year ended December 31, 2014, and a balance sheet as on that date after the following adjustments: (a) It was decided to treat one-third of the amount received on account of donation as income. 31-3-2009 31-3-2010 Unpaid for Medicines 10,000 12000 Stock of Medicines 8000 13000 Payment made for medicines during 2009-10 was 2,50,000 (A) 22,53,000 (C) 2,57,000 (B)2,47,000 (D) 2,43,000 Q. This document is highly rated by … 4. Income and expenditure is a nominal account which includes all revenue items. STEP 1: Prepare Opening Balance Sheet: The preparation of Opening Balance Sheet (i.e., Closing Balance Sheet of the previous year), if it is not given in the question, is very important in the sense […] Commerce Notes | EduRev is made by best teachers of Commerce. Income and expenditure account can be defined as an account that reveals surplus or deficit of a non-trading concern by matching incomes and expenses of a specified accounting period.. Join now. It is prepared same as profit and loss account i.e. 2 There is no distinction between capital and revenue receipts or payments. on accrual basis. The Income and expenditure report template assists in tracking, handling & calculating your individual income, expenses & savings. Log in. 1. As discussed above, you will have to prepare the Income and Expenditure Account and the Balance Sheet at the end of a particular period. 7. Receipt and Payment Account for the year ending . In case of income cash may not increase equal to the amount of income. Go to the accounting code and print the “trial balance” customary report.This is a summary report that contains the ending balance of every account in the general ledger. If a profit is not intended, e.g. The income and expenditure account is confined to the year of accounting only and it does not include the items of income and expenditure of past and future years optimizes performance. Transactions related to Capital Receipts, Capital Payments and Revenue Receipts/Revenue Payments of the previous/future periods and occurred during the current year are recorded in the Receipts and Payments Account but do not appear in the Income & Expenditure Account. Explanation. Prepare income and expenditure account and balance sheet form the following receipt and payment account of a nursing society. Due to growth in his business (turnover is now £71,000), and the number of transactions involved, we have now prepared a full set of accounts. 2. How much amount will be shown in Income and Expenditure Account in the following case? Conversion of Receipts and Payment Account into Income and Expenditure Account. Non-trading concerns prepare this account. If your client is registered as trust or societies with any society act or smthing else, you can prepare the income and expenditure account instead of profit or loss account. 8 (d) Prepare the club’s income and expenditure account for the year ended 31 December 2016. 1,200 and Rs. If a profit is intended, then a profit & loss account is prepared. Prepare the Receipts and Payments Account, Income and Expenditure Account and the Balance Sheet showing the working of the Restaurant separately, Cash in hand on March 31, 2012 was Rs 2,600. All incomes and expenses relating to the accounting year, whether they are actually received and paid or not, are taken into consideration. The income and expenditure account is prepared. Receipts $ Payments $ To Balance at bank – 1-7-90 To Subscriptions To Fees from non members To Municipal grant To Donation for building fund To Interest: 2,010 2 The information to draft the statement is all in the organization's ledgers. 5. 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