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Question
Explain any two features of Income and Expenditure account.
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Solution
- Periodic Statement: The Income and Expenditure account is a financial statement that provides a comprehensive overview of an organization's revenue and expenses during a specific period, usually spanning one year. It offers a concise overview of the company's financial performance for that specific time frame, with a primary emphasis on revenue generated and expenses incurred, rather than assets and liabilities.
- Non-profit Organisation: Non-profit organisations, like clubs, societies, and charitable institutions, often rely on the Income and Expenditure account to monitor their financial activities. The Income and Expenditure account focuses on revenue sources such as donations, grants, membership fees, and fundraising activities. It also includes expenses that are aligned with the organization's mission and objectives.
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RELATED QUESTIONS
Justify either for or against by giving a reason for the following statement. ‘Income and Expenditure account shows the opening and closing balances of cash in hand and cash at bank.’
State any three points of difference between ‘Receipts and Payment Account’ and ‘Income and Expenditure Account’.
______ depicts the Capital fund of the organization.
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______ account is prepared to ascertain surplus or deficit at the end of an accounting year.
On the other hand, if the total of ______ side is greater than the total of ______ side, it is known as 'deficit' or 'excess of expenditure over income'.
Explain the term deficit in Income and Expenditure Account.
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