- The Income and Expenditure Account is a Nominal Account that records revenue incomes and expenses of the current year only.
- It is similar to the Profit and Loss Account and is prepared by not-for-profit organisations.
- It includes items whether received/paid or outstanding/prepaid, as long as they relate to the current year.
- The result may be Surplus (income > expenses) or Deficit (expenses > income), which is adjusted in the Capital Fund.
- It has no opening balance and includes both cash and non-cash items like depreciation, bad debts, and outstanding expenses.
Definitions [4]
Definition : Balance Sheet
A balance sheet is a financial statement that shows the assets, liabilities, and owner’s equity of a business at a specific point in time, providing a clear picture of its financial position.
Definition : Adjustments in Final Accounts
Adjustments in final accounts are changes or entries made at the end of the accounting period to include any income or expenses that were missed or need to be updated so that the financial statements show the true financial position of the business.
Definition: Asset
Anything valuable the business owns or controls, measured in money.
Definition: Liability
Money the business still needs to pay.
Formulae [1]
Formula: Net Worth
Owner’s Equity (Capital) = Assets – Liabilities
Includes: Owner’s investment (cash or kind) + profits kept in the business.
Key Points
Format: Receipts and Payments Account
Receipts and Payments Account
for the year ended 31st March 20......
Dr. Cr.
| Receipts | Amount ₹ | Payments | Amount ₹ |
|---|---|---|---|
| To All Receipts | ............ | By All Payments | ............ |
| (Revenue or Capital) | (Revenue or Capital) | ||
| Previous year – ............ | Previous year – ............ | ||
| Current year – ............ | Current year – ............ | ||
| Next year – ............ | Next year – ............ |
Format: Receipts and Payments Account (Detailed)
In the books of........
Receipts and Payments Account
For the year ended 31st March 20......
Dr. Cr.
| Receipts | Amt ₹ | Amt ₹ | Payments | Amt ₹ | Amt ₹ |
|---|---|---|---|---|---|
|
To Balance b/d Cash in Hand Cash at Bank (Name of Banks) |
xxx xxx |
xxx |
By Balance b/d (Bank overdraft) |
xxx | |
|
By Salaries Previous year Current year |
xxx xxx |
xxx |
|||
|
To Subscriptions Previous year Current year Next year |
xxx xxx xxx |
xxx |
By Rent Rates and Taxes Previous year Current year Next year |
xxx xxx xxx |
xxx |
| To Entrance fees | xxx | By Printing and Stationery | xxx | ||
| To Admission fees | xxx | By General Expenses | xxx | ||
| To Life membership fees | xxx | By Interest on Bank Loan | xxx | ||
| To Legacies | xxx | By Electricity Charges | xxx | ||
| To Govt. Grants | xxx | By Audit Fees | xxx | ||
| To Donations (General) | xxx | By Tournaments Exp. | xxx | ||
|
To Donations for specific fund, Building Fund, Prize Fund, Tournament Fund |
|
xxx xxx xxx xxx |
By Wages | xxx | |
| By Purchase of Sports Materials | xxx | ||||
| By Insurance | xxx | ||||
| To Dividend - Received | xxx | By Telephone / Mobile Exp. | xxx | ||
| To Hire / Rent of Hall received | xxx | By Bank Charges | xxx | ||
| To Sundry Income | xxx | By Postage | xxx | ||
| To Sale of old materials | xxx | By Conveyance | xxx | ||
| To Sale of old News Papers / Scrap | xxx | By Expenses for Annual Function | xxx | ||
| To Misc. Receipts | xxx | By Fixed Deposit | xxx | ||
| To Tournaments Receipts | xxx |
By Purchase of Fixed Assets Books Furniture Building Investments |
xxx xxx xxx xxx xxx |
||
| To Cricket Fees | xxx | ||||
| To Tuition Fee | xxx | ||||
| To Term Fees | xxx | ||||
| To Collection of Fine | xxx | ||||
| To Locker Rent | xxx | By News Papers | xxx | ||
| To Exam Fees | xxx | By Office Expenses | xxx | ||
| To Balance c/d (Bank overdraft) | xxx | By Repairs | xxx | ||
| By Balance c/d | xxx | ||||
| Cash in Hand | |||||
|
Cash at Bank (Names of Bank) |
xxx xxx |
||||
| Total | xxx | Total | xxx |
Key Points: Receipts and Payments Account
- Receipts and Payments Account is a real account that records all cash and bank transactions (revenue or capital) during the year, regardless of the period they relate to.
- It is similar to a cash book and starts with opening balances of cash and bank, and ends with closing balances.
- Revenue receipts (e.g. subscriptions, rent) go to Income & Expenditure A/c, while capital receipts (e.g. donations for building) are shown in the Balance Sheet.
- Revenue payments (e.g. salaries, taxes) are shown in Income & Expenditure A/c, and capital payments (e.g. purchase of assets) are shown on the Asset side of the Balance Sheet.
- Deferred revenue expenditure is a revenue expense giving benefits for multiple years, partly shown in Income & Expenditure A/c and partly in the Balance Sheet.
Format: Income and Expenditure Account
In the books of......
Income and Expenditure Account
For the year ended 31st March 20.....
Dr. Cr.
| Expenditure | Amt ₹ | Amt ₹ | Income | Amt ₹ | Amt ₹ |
|---|---|---|---|---|---|
| To Salaries paid | xxx | By Subscription Received | xxx | ||
| Less: paid for last year | xxx |
Less: i) received for last year ii) received of next year |
xxx xxx |
xxx |
|
| paid for next year | xxx | ||||
| Add: Outstanding | xxx | ||||
| Add: Prepaid for last year | xxx | xxx |
Add: i) Received during last year for current ii) Outstanding for current year |
xxx
xxx |
xxx |
| To Wages | xxx | ||||
| To Printing and Stationery | xxx | ||||
| To Rent | xxx | By Rent Received | xxx | ||
| To Interest | xxx | By Interest Received | xxx | ||
| To Conveyance | xxx | By Dividend Received | xxx | ||
| To Rates & Taxes | xxx | By Govt. Grants (General) | xxx | ||
| To Insurance Premium | xxx | By Ground Rent | xxx | ||
| To Audit Fees | xxx | By Sundry Receipts | xxx | ||
| To Office Expenses | xxx | By Entrance Receipts (Revenue) | xxx | ||
| To Telephone / Mobile Expenses | xxx | By Entrance Fee (Revenue) | xxx | ||
| To Medicines | xxx | By Admission Fees | xxx | ||
|
To Sports Materials consumed during the year Opening Stock Add: Purchases Less: Closing Stock |
xxx xxx xxx |
xxx |
By Donations (General) | xxx | |
| By Profit on Sale of Asset | xxx | ||||
| By Deficit (Excess of expenditure over income) | xxx | ||||
| To Repairs and Maintenance | xxx | ||||
| To Electricity Charges | xxx | ||||
| To Newspapers and Periodical | xxx | ||||
| To Sundry Expenses | xxx | ||||
| To Loss on Sale of Asset | xxx | ||||
| To Depreciation on Fixed Assets | xxx | ||||
| To Surplus (Excess of Income over Expenditure) | xxx | ||||
| Total | xxx | Total | xxx |
Key Points: Income and Expenditure Account
