Skip to content

ACCA Applied Skills · Financial Reporting · Not-for-profit and public sector entities

Which statement best describes the purpose of an income and expenditure account prepared by a not-for-profit entity?

An income and expenditure account shows income earned and expenditure incurred for the period on an accruals basis, resulting in a surplus or deficit. It differs from a receipts and payments account, which simply summarises cash movements.

  1. AIt shows cash received and paid during the period regardless of the period to which items relate
  2. BIt shows income earned and expenditure incurred for the period on an accruals basis, giving a surplus or deficitCorrect
  3. CIt shows the assets and liabilities of the entity at the year end
  4. DIt shows only the profit made from trading activities such as the bar

Explanation

The income and expenditure account is the not-for-profit equivalent of the statement of profit or loss, prepared on an accruals basis with a surplus or deficit as the result. The option describing cash receipts and payments describes the receipts and payments account instead.

Did you get it right without looking?

One question tells you little. A timed set on Not-for-profit and public sector entities shows your real accuracy, how long you take and where you lose marks.

Practise Not-for-profit and public sector entitiesFree diagnostic mock

More Not-for-profit and public sector entities questions