Income and Expenditure A/c includes : (A) Interest on Investment(B) C…

Income and Expenditure A/c includes :

(A) Interest on Investment
(B) Consumable items
(C) Depreciation
(D) Life membership fees
(E) Donation (specific)

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A), (B) and (C) Only

The Income and Expenditure Account takes only revenue items of the current year, together with non-cash expenses such as depreciation.

(A) Interest on Investment — included: a revenue income of the year.

(B) Consumable items — included: the value consumed during the year is a revenue expense.

(C) Depreciation — included: a non-cash expense charged for the year.

(D) Life membership fees — not included: a capital receipt credited to the capital fund.

(E) Donation (specific) — not included: capitalised and shown on the liabilities side of the Balance Sheet.

Note: This question is from the pre-rationalised NCERT book. The topic is not there in the latest NCERT book (2026-27), and it is also out of the CUET 2026 syllabus.

NCERT (Pre-rationalised edition):
Income and Expenditure Account – “It is the summary of income and expenditure for the accounting year. It is just like a profit and loss account prepared on accrual basis in case of the business organisations. It includes only revenue items and the balance at the end represents surplus or deficit.”

NCERT (Pre-rationalised edition):
Steps in the Preparation of Income and Expenditure Account – “… 6. Consider the following items not appearing in the Receipt and Payment Account that need to be taken into account for determining the surplus/ deficit for the current year : (a) Depreciation of fixed assets.”

NCERT (Pre-rationalised edition):
Life Membership Fees – “… Some members prefer to pay lump sum amount as life membership fee instead of paying periodic subscription. Such amount is treated as capital receipt and credited directly to the capital/general fund.”

NCERT (Pre-rationalised edition):
Specific Donations – “… If donation received is to be utilised to achieve specified purpose, it is called Specific Donation. The specific purpose can be an extension of the existing building, construction of new computer laboratory, creation of a book bank, etc. Such donation is to be capitalised and shown on the liabilities side of the Balance Sheet irrespective of the fact whether the amount is big or small.”