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Question
Explain the term surplus in Income and Expenditure Account.
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Solution
- Surplus in the structure of an Income and Expenditure Account refers to the excess of income over expenditure for a given accounting period.
- A non-trading organization, such as a non-profit or a club, generates more revenue than it spends on operations and activities, resulting in a surplus.
- The surplus is added to the organization's capital fund and represents a positive financial performance over the term.
RELATED QUESTIONS
Income and expenditure contain only ______ items.
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.’
______ depicts the Capital fund of the organization.
The closing balance of this account shows surplus/deficit ______.
How will Income and Expenditure account benefit a non-trading sports organisation?
It is a summary of all incomes and expenses of the current accounting year. It is prepared to know the surplus or deficit during the accounting year.
It serves as the basis for preparing the Balance Sheet of a non-trading organisation.
It contains only revenue items.
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'.
Why and by whom is an Income and Expenditure Account prepared?
