In the financial Statements of Not-for-profit organisations, one of the statements Incomes and Expenditures Account is also prepared along with the Receipts and Payments Account and Balance Sheet.
1. Meaning of Income and Expenditure Account: –
The Income and Expenditure account is similar to the Trading and Profit/Loss account prepared in the commercial(profit) organisations. All the transactions of the revenue receipts and payments related to the current year are recorded in these accounts in Not-for-Profit organisations.
The excess over the income from expenditure is known as Surplus instead of Profit and excess over the expenditure from the income is known as a deficit instead of a loss. The following is the format of the Income and Expenditure account.
2. Example of Income and Expenditure Account: –
We have created two examples for you, One is with surplus balance (Profit) and another is with deficit balance(loss). These are shown as under: –
1. With Surplus balance: –
| In the Books of Tutor’sTips Social Welfare Club | |||
| Receipts and Payment Account as on 31 March 2020 | |||
| Receipts | Amount | Payment | Amount |
| To Balance b/d | By Salaries a/c | 2,00,000 | |
| Cash In Hand | 25,000 | By Insurance a/c | 2,500 |
| Cash at Bank | 1,50,000 | By Rent a/c | 60,000 |
| To Subscriptions a/c | 5,00,000 | By Printing and Stationery a/c | 10,000 |
| To Entrance/Admission Fees a/c | 50,000 | By Postage and Telegarm a/c | 5,000 |
| To Sale of old Assets a/c (Book Value 2500) | 3,310 | By Mobile and Telephone charges a/c | 1,250 |
| To Sale of old Newspapers a/c | 1,256 | By Audit Fees a/c | 2,500 |
| To Rent Received for hall a/c | 20,000 | By Interest paid a/c | 3,200 |
| To Interest Received a/c | 1,250 | By Honorarium a/c | 6,000 |
| To Dividend Received a/c | 2,510 | By Refreshment a/c | 250 |
| To General Donation a/c | 50,000 | By Building a/c | 8,00,000 |
| To Donation for building a/c | 10,00,000 | By Miscellaneous Exp a/c | 50 |
| To Miscellaneous Receipts a/c | 250 | ||
| By Balance c/d (Closing Balance) | |||
| Cash in Hand | 30,000 | ||
| Cash at Bank | 6,83,826 | ||
| 18,03,576 | 18,03,576 | ||
Additional Information: –
a) Salaries Outstanding at the end Rs. 5,000
b) Salaries Outstanding in the beginning Rs. 3,500
c) Insurance Advance Insurance at end Rs. 500
d) Rent Outstanding in the beginning Rs. 5,000
e) Rent Outstanding at the end Rs. 10,000
f) Subscription Outstanding in the beginning Rs. 30,000
g) Subscription Outstanding at the end Rs. 25,000
h) Subscription Advance in the beginning Rs. 12,500
i) Subscription Advance at the end Rs. 25,000
Please prepared Income and expenditure accounting for the year ending 31-03-21
Solution: –
2. With Deficit balance: –
In this example, we have just changed the balances of some amounts. Which I have highlighted with red color.
| In the Books of Tutor’sTips Social Welfare Club | |||
| Receipts and Payment Account as on 31 March 2020 | |||
| Receipts | Amount | Payment | Amount |
| To Balance b/d | By Salaries a/c | 3,00,000 | |
| Cash In Hand | 25,000 | By Insurance a/c | 2,500 |
| Cash at Bank | 1,50,000 | By Rent a/c | 60,000 |
| To Subscriptions a/c | 2,00,000 | By Printing and Stationery a/c | 10,000 |
| To Entrance/Admission Fees a/c | 50,000 | By Postage and Telegarm a/c | 5,000 |
| To Sale of old Assets a/c (Book Value 2500) | 3,310 | By Mobile and Telephone charges a/c | 1,250 |
| To Sale of old Newspapers a/c | 1,256 | By Audit Fees a/c | 2,500 |
| To Rent Received for hall a/c | 20,000 | By Interest paid a/c | 3,200 |
| To Interest Received a/c | 1,250 | By Honorarium a/c | 6,000 |
| To Dividend Received a/c | 2,510 | By Refreshment a/c | 250 |
| To General Donation a/c | 50,000 | By Building a/c | 8,00,000 |
| To Donation for building a/c | 10,00,000 | By Miscellaneous Exp a/c | 50 |
| To Miscellaneous Receipts a/c | 250 | ||
| By Balance c/d (Closing Balance) | |||
| Cash in Hand | 30,000 | ||
| Cash at Bank | 6,83,826 | ||
| 18,03,576 | 18,03,576 | ||
Additional Information: –
a) Salaries Outstanding at the end Rs. 5,000
b) Salaries Outstanding in the beginning Rs. 3,500
c) Insurance Advance Insurance at end Rs. 500
d) Rent Outstanding in the beginning Rs. 5,000
e) Rent Outstanding at the end Rs. 10,000
f) Subscription Outstanding in the beginning Rs. 30,000
g) Subscription Outstanding at the end Rs. 25,000
h) Subscription Advance in the beginning Rs. 12,500
i) Subscription Advance at the end Rs. 25,000
Please prepared Income and expenditure accounting for the year ending 31-03-21
Solution: –
3. Format of Income and Expenditure Account: –
We have created the format of the Income and Expense account in PDF and Excel. These are shown as below: –
1. The format in Excel: –
Download the Excel Sheet from the below link. It has two worksheets
- Format for Surplus Balance
- Format for Deficit Balance
2. The format in PDF: –
Download the PDF from the below link.
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- Format of Income and Expenditure Account Format – Surplus Balance
- Format of Income and Expenditure Account Format – Deficit Balance
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