Which of the following serves the same purpose as the income and expenditure account of a non-trading organization?
Answer Details
The term that serves the same purpose as the income and expenditure account of a non-trading organization is the "profit and loss account."
The profit and loss account is a financial statement that summarizes the revenues, costs, and expenses incurred by a business organization during a specified period of time. It shows the financial performance of the organization by comparing the total revenue earned with the total expenses incurred to generate that revenue. The profit and loss account is commonly used by trading organizations to calculate their net profit or loss, but it also serves the same purpose as the income and expenditure account of a non-trading organization.
A non-trading organization, such as a charity or non-profit organization, does not generate revenue from the sale of goods or services. Instead, it receives income from donations, grants, or other sources, and it incurs expenses related to its charitable activities. The income and expenditure account of a non-trading organization records all the income received and expenses incurred by the organization during a specified period of time, such as a financial year.
Like the profit and loss account, the income and expenditure account helps to determine the financial performance of the non-trading organization. It shows whether the organization has generated a surplus or deficit in the period, and it helps the organization to plan for the future by providing a detailed breakdown of its income and expenses.