The Income & Expenditure Account is equivalent to the Profit & Loss Account of business enterprises. It shows on the credit side all revenue
Income for the period to which it relates. Similarly, on the debit side, it shows all expenses of revenue nature for the period. No capital expenditure of receipt is taken up in the Income & expenditure account. If the credit total of this account
Excess 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 'excess of Expenditure over Income'.
Thus, the method and technique of the preparation of an Income & Expenditure Account is similar to that which is followed in The preparation of a Profit &; Loss Account of a profit-seekingConcern.
".Necessary steps to prepare and Income& expenditure a/c." :
The following steps are necessary in order to prepare an Income & Expenditure Account forms a Receipts & Payments Account relating to a particular period :
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Now ascertain surplus or deficit in the Income& expenditure account.
Account, the Credit balance of the account indicates 'excess of
income Over expenditure and debit balance indicates an excess of
expenditure on Income & expenditure account. andTransfer this balance to the Capital Fund Account.
