Statement of Income and Expenditure

Income and expenditure account

It is akin to trading and profit and loss accounts of trading organizations and can be described as a summary of income earned and expenditure incurred during the accounting year. The accrual basis of accounting is followed to prepare this account. Like trading and profit and loss account, only revenue income and expenses are considered for preparing the Income and Expenditure account. Excess of income over expenditure represents surplus and excess of expenditure over income represents deficit. Net operating result i.e. surplus (i.e. excess of income over expenditure) or deficit (i.e. excess of expenditure over income), is added or deducted respectively to the capital fund shown in the balance sheet.

Income and expenditure account for the year ending on ………………..

EXPENDITURE	Amount	INCOME	Amount
Printing and Stationery	xxx	Subscriptions	xxx
Lighting	xxx	Entrance fees	xxx
Rates and Taxes	xxx	Interest on investments	xxx
Telephone charges	xxx	Locker rent	xxx
Postage and carrier charges	xxx	Deficit (Balancing figure)	xxx
Wages and Salaries	xxx
Insurance Premium	xxx
Surplus (Balancing figure)	xxx

Preparation of Income and Expenditure account

i. Income and Expenditure statement is prepared on the basis of Receipt and Payment Account and additional information, if any. ii. Follow accrual basis of accounting for preparing Income and Expenditure account. iii. Only revenue income and expenditure is to be considered while preparing Income and Expenditure account. Exclude the capital receipts and capital payments as these are to be shown in the Balance Sheet. Exclude the donations received for specific purpose. iv. Only that portion of receipts and payments is to be recorded in Income and Expenditure which belongs to current accounting year. Make adjustments by excluding the amounts relating to the preceding and the succeeding periods and including the amounts relating to the current year not yet received. v. Opening and closing balances of cash and bank will not appear in the Income and Expenditure account.