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SS2: FINANCIAL ACCOUNTING - 2ND TERM

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This is the account which shows the summary of revenue and running costs of non-profit making organizations. It follows the same principle as the profit and loss account of a trading concern. It is part of the double-entry and income is shown on the credit side and expenditure on the debit side. The balance represents the surplus of income over expenditure and vice versa.

Features of Income and Expenditure Account

1. Equivalent of profit and loss in a trading concern

2. Balance represents surplus or deficiency.

3. Expenditure are debited and income credited i.e It is a nominal account.

4. Adjustments for accrual and prepayments are made.

5. Capital receipts and expenditure are not posted but only revenue items.

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