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Income and Expenditure Account with Adjustments Video Lecture - Commerce
FAQs on Income and Expenditure Account with Adjustments Video Lecture - Commerce
| 1. What is an Income and Expenditure Account? |  |
Ans. An Income and Expenditure Account is a financial statement that summarizes an organization's income and expenses over a specific period. It is commonly used by non-profit organizations and clubs to track their financial performance.
| 2. What are the adjustments in an Income and Expenditure Account? | |
Ans. Adjustments in an Income and Expenditure Account are made to ensure that all income and expenses are accounted for correctly. These adjustments can include accrued income, prepaid expenses, outstanding expenses, and unearned income. They help in providing a more accurate picture of the organization's financial position.
| 3. How is accrued income treated in an Income and Expenditure Account? | |
Ans. Accrued income refers to income that has been earned but not yet received. In an Income and Expenditure Account, accrued income is added to the income side as it represents the organization's entitlement to receive the income. It is necessary to include accrued income to reflect the true financial performance of the organization.
| 4. What is the significance of outstanding expenses in an Income and Expenditure Account? | |
Ans. Outstanding expenses are expenses that have been incurred but not yet paid. These expenses are treated as liabilities in the Income and Expenditure Account. Including outstanding expenses is important as it ensures that all expenses are accounted for, giving a more accurate representation of the organization's financial position.
| 5. How are prepaid expenses adjusted in an Income and Expenditure Account? | |
Ans. Prepaid expenses are expenses that have been paid in advance but relate to a future period. In an Income and Expenditure Account, prepaid expenses are deducted from the respective expense account. This adjustment is made to reflect the portion of the prepaid expense that relates to the current period and to avoid overstating expenses in the account.
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Nov 09, 2024 Last updated |
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