Q.Which of the following items is NOT shown in the Income and Expenditure Account of a not-for-profit organization?

Only revenue items and non-cash adjustments appear in the Income and Expenditure Account; capital expenditure itself never does. …

Testing each option against the rule that the Income and Expenditure Account shows only revenue items (plus non-cash adjustments), never capital items:

1. Salaries paid is a routine revenue expense of running the organization, debited to the Income and Expenditure Account.
2. Depreciation on fixed assets, although a non-cash item that never appears in the Receipts and Payments Account, relates to the wearing out of assets used during the year and is debited to the Income and Expenditure Account.
3. Purchase of a fixed asset is capital expenditure — it increases the organization's assets rather than being consumed within the year, and is recorded only in the Balance Sheet (added to the relevant asset account); only the asset's depreciation for the year, not its purchase cost, is charged to the Income and Expenditure Account. …

Confusing the treatment of purchasing an asset (never in the Income and Expenditure Account) with the treatment of depreciating or selling it at a loss (both …