What is the exact definition of an Income & expenditure account compared to a Profit and Loss Account.
Thanks
GFOXWELL
Replies (8)
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Motive
I agree with John. It depends on the motive. A small rural Village Hall for example (like the one I'm involved with) does not exist to make a profit but purely to manage their affairs for the benefit of the local community. Whilst a profit is always welcome it is not the driving force. It is far more appropriate to record the accounts as an I&E account with either a surplus or a deficit as opposed to a profit or loss. It might upset those who make donations to us if they thought they were adding to our "profit" and that maybe their donations were not really required. All surpluses are used for the maintenance of the Hall. Hope this helps.
Now please don't shoot me down in flames.........
......as I have not researched this answer and merely going on dim and distant memory and practice, but MIGHT it be something along the lines of:
P&L account is prescribed in Companies Act and certain "rules" such as layout/format applies.
I&E account is not prescribed in Companies Act???....but does certainly arrive at the surplus/deficit figure using accruals concept?
I agree that receipts and payments account is something else.
I would like to know the answer as well.
Nail on head..
Yes, I agree with John.
I forgot that there are such things as non-profit making organisations. I need to get out more I think!
Dean
Not necessarily so...
From my days working in the public sector an income and expenditure account was the equivalent of a p & l account for non profit making organisations. They too were prepared on an accruals basis.
Regards
Joy
The answers in the question..
An I&E account records only income and expenditure. A P&L account shows the profit or loss.
I&E is produced on a cash basis, P&L is produced on an accruals basis.
Dean
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