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CSEET · Fundamentals of Accounting · Accounting for Non-Profit Organizations

While converting a Receipts and Payments Account into an Income and Expenditure Account, which item is excluded from the Income and Expenditure Account?

Purchase of furniture is excluded from the Income and Expenditure Account because it is a capital payment. It is shown as an asset in the Balance Sheet, whereas salaries, stationery and interest received are revenue items.

  1. ASalaries paid
  2. BPurchase of furnitureCorrect
  3. CPrinting and stationery paid
  4. DInterest received on investments

Explanation

Purchase of furniture is a capital payment and appears as an asset in the Balance Sheet. Salaries, stationery and interest on investments are revenue items and are adjusted for outstanding or prepaid amounts before being included in the Income and Expenditure Account.

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