Question

State whether the following statement is True or False.
Every year, ‘Bal Vikas Mandir’, a primary school, prepares Income and expenditure Account.

Options

• True

• False

Answer 1

True
Explanation: It is an account prepared by NPOs to know the surplus earned /deficit incurred during the accounting period. It is similar to the Profit and Loss Account prepared by the profit-making organisations. It is a nominal account, where all the revenue expenses are debited and revenue incomes are credited. As Bal Vikas Mandir is a school (i.e. an NPO), it prepares Income and Expenditure Account.