The Income & Expenditure
The account which is equivalent to the profit & loss Account of a business enterprise. It shows on the credit side all revenue Income for the period to which it relates.
Similarly, on the debit side, it show's all expenses of revenue nature for the period. No capital expenditure or receipt is taken in the Income &Expenditure
Account. If the credit total of this account exceeds the Debit total, the balance is a surplus and is called "Excess of Income over Expenditure". Conversely, if the debt total exceeds the credit total, the balance is a deficit and is called Income and Expenditure Account
"Excess of Expenditure over Income.
Thus, the method and technique of the preparation of an Income &Expenditure Account are similar to that which is followed in the preparation of a Profit & Loss Account of a profit-seeking concern.
Profit & Loss Account: The purpose of the Profit &Loss Account is to show the net result of the business.
The account is therefore credited with the gross profits & another gain, which is made apart from trading, and debited with all the charges incurred in the course of business other than those, which have already been taken to the Trading Account. The difference of this account is called net Profit or Net Loss.IT can be prepared either in horizontal format or vertical format.
