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The income and expenditure account is prepared in order to find out the:
AProfit or loss for the year
BClosing cash and bank balances
CFinancial position of the concern
DSurplus or deficit for the year
Answer & Solution
Correct answer: D. Surplus or deficit for the year
1. A not-for-profit organisation has no profit motive, so its result is not called profit or loss.
2. The income and expenditure account is prepared to find out the surplus or deficit pertaining to a particular year.
3. An excess of income over expenditure is a surplus, and an excess of expenditure over income is a deficit.
4. The closing cash and bank balances come from the receipts and payments account, and the financial position from the balance sheet.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 2 "Accounts of Not-for-Profit Organisation", §2.5_
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