Digital Accounting and Tax Solutions-Your Business Adviser

An income and expenditure account is a financial statement prepared by non-profit organizations to determine if they have earned a surplus or suffered a deficit during an accounting period. It records all revenue incomes and expenses on an accrual basis, strictly excluding any capital items.

Key Characteristics

Nature: It is a nominal account. All expenses and losses are debited, while all incomes and gains are credited.

Accounting Basis: It uses the accrual concept. Only revenue items relating to the current accounting year are included (prepaid and outstanding amounts are adjusted).

No Capital Items: Capital receipts (like major donations for a building) and capital expenditures (like purchasing machinery) are excluded.

Equivalent to P&L: It serves the same function for non-profits as a Profit and Loss Account does for a for-profit business.

Surplus vs. Deficit

Surplus: If total income exceeds total expenditure, the difference is a surplus. This is added to the Capital/General Fund in the Balance Sheet.

Deficit: If total expenditure exceeds total income, the difference is a deficit. This is deducted from the Capital/General Fund.

Accounts receivable (AR) represents the money a business’s customers owe for goods or services already delivered but not yet paid for. Because a customer has a legal obligation to pay, AR is recorded as a short-term asset on the balance sheet and is crucial for maintaining healthy cash flow.

Core Components of Accounts Receivable
Nature of the Asset:
AR functions like an informal line of credit extended by a company. When a client is billed and accepts an invoice, they receive the product/service now and agree to pay within a set window (e.g., 15, 30, or 60 days).

The Opposite (Accounts Payable):
While AR represents incoming cash that a company is owed, Accounts Payable (AP) represents outgoing cash, or debts that a company owes to its own vendors and suppliers.

Impact on Cash Flow:
Revenue is only truly realized once the customer pays the invoice. Tracking AR ensures that the business is not overextended on credit, which can severely restrict working capital and operational growth.

Accounts Payable (AP) is the money a business owes its vendors or suppliers for goods and services purchased on credit. It is recorded as a current liability on a company’s balance sheet and typically represents short-term debts that must be paid back within 30 to 90 days.

Understanding AP involves knowing its core business functions and its exact placement in the broader accounting cycle:

1. How It Works
When a company receives supplies, inventory, or professional services but does not pay for them immediately, the supplier issues an invoice. The business logs this unpaid amount into Accounts Payable. Once the invoice is paid, the AP liability decreases by the corresponding amount.

2. Common Examples
Inventory & Supplies: Ordering raw materials or goods on credit to be sold later.

Utilities & Rent: Bills (electricity, water, internet) received and paid at the end of the month.

Professional Services: Invoices from legal, marketing, or IT consultants.

Financial Year 2025-2026 की Income Tax Return भरने में जल्दबाज़ी न करें।

Fourth Quarter के TDS statements/certificates तथा बैंकों, कंपनियों, Mutual Funds आदि द्वारा दी जाने वाली Statement of Financial Transactions (SFT) की अंतिम तिथि 31 मई 2026 तक है। इसलिए इस तिथि से पहले आपके AIS, TIS और Form 26AS में सभी आवश्यक सूचनाएँ पूर्ण रूप से दिखाई देना संभव नहीं है।

अतः अपना ITR भरने से पहले, 31 मई 2026 के बाद उपलब्ध updated AIS, TIS और Form 26AS अवश्य डाउनलोड कर मिलान करें। आवश्यकता हो तो portal पर सूचना अपडेट होने के लिए कुछ दिन का समय भी दें।

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