Gujarat BoardEnglish MediumSTD 11 CommerceAccountP2 C9 Accounts ol‘Non—trading Concerns2 Marks
Question
Write Short notes: $(1)$ Income-Expenditure Account:
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Answer
The account which is prepared at the end of accounting period to know the resultof non-trading concern is called as income expenditure account. This account is likea profit and loss account of a trading concern. • Points to be considered during preparation of Income-Expenditure Account:
$(i)$ In opening there is no balance in Income-Expenditure Account
$(ii)$ On the creditside of this account, revenue income of current year are disclosed and on the debitside revenue expenses of current year are disclosed.
$(iii)$ Do not consider capitalexpenses and capital incomes.
$(iv)$ Since account is prepared under mercantile system,revenue incomes are consider. In the same manner revenue expenses are considered.
$(v)$ In Income-Expenditure account non-cash transaction like depreciation, bad-debts,etc. are considered.
$(vi)$ At the time of closing Income-Expenditure Account:
$(a)$ Ifincomes are exceeding expenses, the closing balance is known as 'excess of incomeover expenditure', which is similar to the profit of a trading concern.
$(b)$ If expensesare exceeding incomes, the closing balance is known as 'excess of expenditure overincomes' which is similar to the loss of a trading concern.
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