Following are the features of Income & Expenditure Account. It is the account of revenue income and revenue expenditure of an accounting year. It is not confined to cash transactions only, i.e. Non-cash transactions are also included in it. The whole amount of the income or expenditure- whether received or paid in cash or not- is received in it. All expenditures are recorded on Debit side and all incomes on Credit side. Only revenue transactions are recorded here. Its balance may be either debit or credit. Its balance is transferred to Capital Fund. It has no opening balance. Its closing balance either surplus or deficit. Credit balance indicates surplus while debit balance indicates deficit. Transactions relating to the current year only are recorded in it. Hence, adjustments are invariably made for pre-received or accrued incomes and pre-paid or outstanding expenses. In a word, it is prepared on Accrual basis. It is, infect, similar to Profit & Loss Account of a profit-seeking business concern. It is within the Double Entry System. It is accompanied by Balance Sheet. It is compulsory. It must be prepared in order to ascertain the true result of a concern.
Features of income determination
What kinds of accounts come under income and expenditure account ?