(a) From the following Receipts and Payments account of Tenkasi Thiruvalluvar Manram, prepare Income and Expen

Question 42 of 48

(a) From the following Receipts and Payments account of Tenkasi Thiruvalluvar Manram, prepare Income and Expenditure account for the year ended 31st March 2022.

Receipts	₹	Payments	₹
To Balance b/d — Cash in hand	14,000	By Salaries	20,000
To Interest received	5,000	By Rent	24,000
To Subscription	55,000	By Travelling Expenses	2,000
To Legacies	48,000	By Printing and Stationery	6,000
To Entrance Fees	7,000	By Investments made	50,000
To Sale of Furniture (Book Value ₹ 17,000)	16,000	By Sports equipments purchased	33,000
		By Balance c/d — Cash in hand	10,000
	1,45,000		1,45,000

(b) From the following particulars, prepare Comparative Balance Sheet of Malar Ltd. as on 31st March 2021 and 31st March 2022.

Particulars	31st March 2021 ₹	31st March 2022 ₹
I. EQUITY AND LIABILITIES
1. Shareholder's fund
(a) Share Capital	2,00,000	2,50,000
(b) Reserve and Surplus	50,000	50,000
2. Non-Current liabilities
Long-term borrowings	30,000	60,000
3. Current liabilities
Trade Payables	20,000	60,000
Total	3,00,000	4,20,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets	1,00,000	1,50,000
(b) Non-Current Investments	50,000	75,000
2. Current Assets
Inventories	75,000	1,50,000
Cash and Cash equivalents	75,000	45,000
Total	3,00,000	4,20,000

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2025Subjective· 5mImportance★★★★★

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Concept understanding — Income and Expenditure Account

An Income and Expenditure Account is the not-for-profit organisation's equivalent of a Profit & Loss Account: a nominal account prepared on the accrual basis that records only revenue incomes and expenses of the current period, and whose balance is a surplus (excess of income over expenditure) or deficit rather than profit or loss.

Convert the cash-based Receipts & Payments Account into the accrual-based Income & Expenditure Account by removing all capital items and all items of other periods, then adjusting current-period incomes/expenses for outstanding and prepaid amounts.

How it differs from Receipts & Payments

Receipts & Payments A/c = a summarised cash book: all cash received/paid, capital or revenue, current year or not.
Income & Expenditure A/c = only revenue items of the current year on accrual basis; capital receipts (donations for building, legacies, sale of assets) and capital payments (buying assets) are excluded and go to the Balance Sheet.

Preparing it (the adjustments)

Start from receipts/payments and apply accrual adjustments:

Adjustment	Treatment
Subscriptions received	+ outstanding for this year, − received in advance, − last year's arrears now received
Expenses paid	+ outstanding, − prepaid
Depreciation on assets	Debit (non-cash expense)
Bad debts / provisions	Debit

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(a) Income ₹67,000 (interest 5,000 + subscription 55,000 + entrance fees 7,000; legacies capitalised) − Expenditure ₹53,000 (salaries, rent, travelling, printing, loss on sale of furniture 1,000) = surplus ₹14,000. (b) Comparative balance sheet with each item's change; total +₹1,20,000 (40%).

(a) Tenkasi Thiruvalluvar Manram — Income and Expenditure A/c for the year ended 31.3.2022

Expenditure	₹	Income	₹
To Salaries	20,000	By Interest received	5,000
To Rent	24,000	By Subscription	55,000
To Travelling expenses	2,000	By Entrance fees	7,000
To Printing and stationery	6,000
To Loss on sale of furniture (17,000 − 16,000)	1,000
To Surplus (excess of income over expenditure)	14,000
	67,000		67,000

Notes / treatment: Legacies ₹48,000 are a capital receipt (added to capital fund), so excluded. Investments made ₹50,000 and sports equipment ₹33,000 are capital payments (assets), so excluded. Only the ₹1,000 loss on sale of furniture (book value 17,000 − sale 16,000) is revenue. Entrance fees are treated as revenue income.

(b) Malar Ltd. — Comparative Balance Sheet

Particulars	31.3.2021 ₹	31.3.2022 ₹	Absolute change ₹	% change
I. EQUITY AND LIABILITIES
Share capital	2,00,000	2,50,000	+50,000	25
Reserve and surplus	50,000	50,000	0	0
Long-term borrowings	30,000	60,000	+30,000	100
Trade payables	20,000	60,000	+40,000	200

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 13 on this concept.

CBSE 2026Set ANNUAL1 mark
$Q. Complete the table: Income Expenditure Deficit 25,000 .......... 2,000$
›Reveal solutionSolution

Expenditure = ₹27,000. A deficit is the excess of expenditure over income, so Expenditure = Income + Deficit.

Method

The Income and Expenditure Account of a not-for-profit concern shows a deficit when total expenditure exceeds total income. Therefore:

Deficit = Expenditure − Income

Re-arranging: Expenditure = Income + Deficit

| Item | Amount (₹) | …

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CBSE 2026Set ANNUAL1 mark
$Q. Write the word/phrase/term, which can substitute the following sentence. An account which records only revenue items in the case of a not-for-profit concern.$
›Reveal solutionSolution
The account that records only revenue items of a not-for-profit concern is the Income and Expenditure Account.

A not-for-profit concern (club, school, hospital, trust) does not prepare a Profit and Loss Account. Instead it prepares an Income and Expenditure Account, which is a nominal account resembling a Profit and Loss Account:

It is prepared on the accrual basis and includes only revenue (recurring, current-period) incomes and expenses. …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. Excess of income over expenditure in ‘Not for Profit Concern’ is termed as ______.$
(a) Deficit
(b) Profit
(c) Surplus
(d) Loss
›Reveal solutionSolution

The answer is Surplus.

A Not for Profit Concern (club, school, hospital, trust) does not trade to earn profit, so it prepares an Income and Expenditure Account rather than a Profit and Loss Account. The balancing figure of this account is described in special terms:

Situation Term used
Income greater than Expenditure Surplus
Expenditure greater than Income Deficit
…

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CBSE 2025Set ANNUAL1 mark
$Q. Income and Expenditure Account is a ______ account.$
›Reveal solutionSolution

The answer is Nominal.

Accounts are classified as Personal, Real or Nominal. Nominal accounts deal with incomes, gains, expenses and losses. The Income and Expenditure Account of a Not for Profit concern records:

Debit side Credit side
Revenue expenses & losses Revenue incomes & gains
…

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CBSE 2025Set MARCH1 markMCQ
$Q. Income and Expenditure account is a :$
(a) Representative Personal A/c
(b) Real A/c
(c) Personal A/c
(d) Nominal A/c
›Reveal solutionSolution

The Income and Expenditure Account is a Nominal Account.

The Income and Expenditure Account is prepared by not-for-profit organisations (TN HSC Commerce) to record all revenue incomes and revenue expenses relating to the current period, ending in a surplus or deficit. Because it deals only with items of income and expense — not with persons or property — it falls under the class …

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CBSE 2024Set ANNUAL1 markMCQ
$Q. Find the odd one:$
(a) Audit Fees
(b) Insurance
(c) Medical Expenses
(d) Sundry Receipts
›Reveal solutionSolution

Three items are expenses; one is an income/receipt. The income item is the odd one.

In the Income and Expenditure Account of a not-for-profit concern the items fall on opposite sides:

Item Nature Side of I&E A/c
Audit Fees Expense Debit (Expenditure)
Insurance Expense Debit (Expenditure)
Medical Expenses Expense Debit (Expenditure)
Sundry Receipts Income Credit (Income)
…

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CBSE 2024Set ANNUAL1 markMCQ
$Q. Income and Expenditure Account is a ________ Account.$
(a) Capital account
(b) Real account
(c) Personal account
(d) Nominal account
›Reveal solutionSolution
The Income and Expenditure Account of a not-for-profit concern is a Nominal Account — it is the equivalent of a Profit and Loss Account and records only revenue items.

A not-for-profit concern prepares an Income and Expenditure Account to find its surplus (excess of income over expenditure) or deficit. Because it deals only with revenue incomes and revenue expenses of the current year, it follows the golden rule of nominal accounts:

Debit all expenses and losses.

Credit all incomes and gains. …
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CBSE 2024Set ANNUAL1 mark
$Q. Write the word/phrase/term which can substitute of the following statement: The debit balance of Income and Expenditure Account.$
›Reveal solutionSolution
The debit balance of the Income and Expenditure Account represents the Deficit — the excess of expenditure over income.

At the year-end the Income and Expenditure Account is balanced:

If income exceeds expenditure, the credit balance is a Surplus. …
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CBSE 2024Set MARCH1 markMCQ
$Q. Income and Expenditure Account is prepared to find out :$
(a) Surplus or deficit
(b) Profit or loss
(c) Financial position
(d) Cash and Bank balance
›Reveal solutionSolution
The Income and Expenditure Account is prepared to find the surplus or deficit of a not-for-profit organisation — option (a).

Not-for-profit organisations (clubs, societies, hospitals, schools) do not trade to earn profit, so they do not prepare a Profit and Loss Account. Instead they prepare an Income and Expenditure Account, which is a nominal account maintained on the accrual basis:

All revenue incomes of the year (whether received or not) are credited.

All revenue expenses of the year (whether paid or not) are debited.

The balancing figure is a surplus (income exceeds expenditure) or a deficit (expenditure exceeds income). …
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CBSE 2023Set ANNUAL1 markMCQ
$Q. Income and Expenditure Account is a ________ Account.$
(a) Capital
(b) Real
(c) Personal
(d) Nominal
›Reveal solutionSolution
The correct option is Nominal. The Income and Expenditure Account is prepared by a not-for-profit concern on the same lines as a Profit & Loss Account; it is a Nominal account that records all revenue incomes and expenses of the year and reveals the surplus (excess of income over expenditure) or deficit.

Explanation

Nominal accounts are accounts of incomes, gains, expenses and losses. …
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CBSE 2022Set ANNUAL1 mark
$Q. Aurangabad University prepares _______ Account instead of Profit and Loss Account.$
›Reveal solutionSolution

The blank is Income and Expenditure Account.

A university, like a club or a charitable trust, is a not-for-profit organisation whose objective is service, not profit. Such concerns do not prepare a Profit and Loss Account; instead they prepare an Income and Expenditure Account, which records all revenue incomes and revenue expenditures of the period on an accrual basis. Its balancing figure is a surplus (excess …

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CBSE 2022Set MARCH1 markMCQ
$Q. Income and Expenditure Account is prepared to find out :$
(a) surplus or deficit
(b) profit or loss
(c) financial position
(d) cash and bank balance
›Reveal solutionSolution
The Income and Expenditure Account reveals the surplus or deficit of a not-for-profit organisation.

In the Tamil Nadu HSC Class-12 Accountancy syllabus, not-for-profit organisations (clubs, societies, hospitals) do not aim to earn profit, so they prepare an Income and Expenditure Account instead of a Profit and Loss Account. It records only revenue incomes and revenue expenditures of the current period on an accrual basis.

Excess of income over expenditure = surplus.

Excess of expenditure over income = deficit. …
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Income	Expenditure	Deficit
25,000	..........	2,000

Situation	Term used
Income greater than Expenditure	Surplus
Expenditure greater than Income	Deficit
…

Debit side	Credit side
Revenue expenses & losses	Revenue incomes & gains
…

Item	Nature	Side of I&E A/c
Audit Fees	Expense	Debit (Expenditure)
Insurance	Expense	Debit (Expenditure)
Medical Expenses	Expense	Debit (Expenditure)
Sundry Receipts	Income	Credit (Income)
…

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(a) Tenkasi Thiruvalluvar Manram — Income and Expenditure A/c for the year ended 31.3.2022

(b) Malar Ltd. — Comparative Balance Sheet

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