INCOME AND EXPENDITURE ACCOUNT

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Definitions

1. an account covering a particular financial period and which records the following: on the right-hand side or credit side, the value of the MEST and service particles outflowed or sold by the organization in the period concerned, i.e. the value earned by the organization in the period. On the left-hand side or debit side, the value of MEST and service particles inflowed and used up by the organization for the period concerned. If the value of the outflow exceeds the inflow side, then there is profit; if the value of the inflow is greater, then there is a loss. (BPL 14 Nov 70 III)

2. the I&E A/C shows how much value you received or gave out during a period. The income side of the I&E A/C is a summary of everything to do with the Income Dept. The expenditure side of the I&E A/C is a summary of everything to do with the Disbursements Dept. The I&E A/C shows such things as the amount of depreciation on your assets, and the amount of bad debts written off. These things have not been paid out in money but they are still an expenditure. To reflect reality, the I&E A/C must show how the values of each item have changed during the period. After allowing for depreciation and writing off bad debts, etc., add up the two sides of the I&E A/C. If the income side totals more than the expenditure side, then you have made a profit-real profit in terms of value not just an apparent money profit. (HCO PL 10 Oct 70 I)