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Which of the following is to be recorded in an income and expenditure account?
- a)Purchase of a fixed assets
- b)Profit on sale of fixed a sse ts
- c)Sale of a fixed assets
- d)Capital expenditure incurred on a fixed assets
Correct answer is option 'B'. Can you explain this answer?
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Which of the following is to be recorded in an income and expenditure ...
Recording in Income and Expenditure Account
The income and expenditure account is one of the important financial statements prepared by non-profit organizations to ascertain their financial position. It records all the incomes and expenses of the organization during a particular accounting period. However, certain transactions are not recorded in the income and expenditure account, such as purchase of fixed assets and capital expenditure incurred on fixed assets.
The following transactions are recorded in an income and expenditure account:
Profit on Sale of Fixed Assets
When a non-profit organization sells its fixed assets at a higher price than its book value, it generates profit. This profit on the sale of fixed assets is recorded in the income and expenditure account. It is treated as income and added to the credit side of the account.
For example, if a non-profit organization sells a building for $100,000, and its book value is $80,000, then the profit on the sale of fixed assets would be $20,000. This $20,000 would be recorded on the credit side of the income and expenditure account.
Benefits of Recording Profit on Sale of Fixed Assets in Income and Expenditure Account
Recording profit on the sale of fixed assets in the income and expenditure account has the following benefits:
1. It helps in determining the surplus or deficit of the organization during a particular accounting period.
2. It helps in ascertaining the financial position of the organization.
3. It provides information about the sources of income of the organization.
Conclusion
In conclusion, the income and expenditure account records all the incomes and expenses of a non-profit organization during a particular accounting period. While purchases of fixed assets and capital expenditure incurred on fixed assets are not recorded in the income and expenditure account, profit on sale of fixed assets is recorded in the income and expenditure account. This helps in determining the surplus or deficit of the organization during a particular accounting period, as well as in ascertaining the financial position of the organization.
The income and expenditure account is one of the important financial statements prepared by non-profit organizations to ascertain their financial position. It records all the incomes and expenses of the organization during a particular accounting period. However, certain transactions are not recorded in the income and expenditure account, such as purchase of fixed assets and capital expenditure incurred on fixed assets.
The following transactions are recorded in an income and expenditure account:
Profit on Sale of Fixed Assets
When a non-profit organization sells its fixed assets at a higher price than its book value, it generates profit. This profit on the sale of fixed assets is recorded in the income and expenditure account. It is treated as income and added to the credit side of the account.
For example, if a non-profit organization sells a building for $100,000, and its book value is $80,000, then the profit on the sale of fixed assets would be $20,000. This $20,000 would be recorded on the credit side of the income and expenditure account.
Benefits of Recording Profit on Sale of Fixed Assets in Income and Expenditure Account
Recording profit on the sale of fixed assets in the income and expenditure account has the following benefits:
1. It helps in determining the surplus or deficit of the organization during a particular accounting period.
2. It helps in ascertaining the financial position of the organization.
3. It provides information about the sources of income of the organization.
Conclusion
In conclusion, the income and expenditure account records all the incomes and expenses of a non-profit organization during a particular accounting period. While purchases of fixed assets and capital expenditure incurred on fixed assets are not recorded in the income and expenditure account, profit on sale of fixed assets is recorded in the income and expenditure account. This helps in determining the surplus or deficit of the organization during a particular accounting period, as well as in ascertaining the financial position of the organization.
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Which of the following is to be recorded in an income and expenditure ...
Because profit on sale is also fixed assets and added the capital
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Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer?
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Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer?.
Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer?.
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Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Which of the following is to be recorded in an income and expenditure account?a)Purchase of a fixed assetsb)Profit on sale of fixed a sse tsc)Sale of a fixed assetsd)Capital expenditure incurred on a fixed assetsCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
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