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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 assets
- c)Capital expenditure incurred on a fixed assets
- d)Sale of a fixed assets
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
Which of the following is to be recorded in an income and expenditure ...
The correct option is B.
Income and expenditure is a nominal account which includes all revenue expenses and incomes. It is prepared the same as a profit and loss account i.e. on accrual basis. The difference of this account will represent surplus or deficit. Purchase and sale of fixed assets is a capital expense. And profit on sale of fixed assets is a revenue income, hence it will be included in income and expenditure accounts.
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Which of the following is to be recorded in an income and expenditure ...
Recording in an Income and Expenditure Account:
Income and Expenditure Account is prepared by non-profit organizations to record their revenue and expenditure during a particular period. It is similar to the Profit and Loss Account of a business entity. The following items are recorded in the Income and Expenditure Account:
1. Income: All the revenue received by the non-profit organization during the accounting period is recorded under this head.
2. Expenditure: All the expenses incurred by the non-profit organization during the accounting period are recorded under this head.
3. Profit on sale of fixed assets: If a non-profit organization sells any of its fixed assets at a price higher than its book value, then the profit earned on such sale is recorded under this head.
4. Purchase of a fixed asset: The purchase of a fixed asset is not recorded in the income and expenditure account. It is recorded in the balance sheet as a capital expenditure.
5. Capital expenditure incurred on a fixed asset: The capital expenditure incurred on a fixed asset is not recorded in the income and expenditure account. It is recorded in the balance sheet as a capital expenditure.
Therefore, the correct answer is option 'B': Profit on sale of fixed assets.
Income and Expenditure Account is prepared by non-profit organizations to record their revenue and expenditure during a particular period. It is similar to the Profit and Loss Account of a business entity. The following items are recorded in the Income and Expenditure Account:
1. Income: All the revenue received by the non-profit organization during the accounting period is recorded under this head.
2. Expenditure: All the expenses incurred by the non-profit organization during the accounting period are recorded under this head.
3. Profit on sale of fixed assets: If a non-profit organization sells any of its fixed assets at a price higher than its book value, then the profit earned on such sale is recorded under this head.
4. Purchase of a fixed asset: The purchase of a fixed asset is not recorded in the income and expenditure account. It is recorded in the balance sheet as a capital expenditure.
5. Capital expenditure incurred on a fixed asset: The capital expenditure incurred on a fixed asset is not recorded in the income and expenditure account. It is recorded in the balance sheet as a capital expenditure.
Therefore, the correct answer is option 'B': Profit on sale of fixed assets.
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Which of the following is to be recorded in an income and expenditure ...
Because profit is an income
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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 assetsc)Capital expenditure incurred on a fixed assetsd)Sale of a fixed assetsCorrect answer is option 'B'. Can you explain this answer?
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