Which of the following will be included in preparing of Income and Expenditure Account?

A. Opening and Closing balances of Cash and Bank

B. Amount of revenue received in advance

C. Loss on sale of Asset

D. Purchase of Books

E. Depreciation of Fixed Asset

Choose the correct answer from the options given below.

C and E only

The correct answer is option (2) : C and E only. 

A. Opening and Closing balances of Cash and Bank- This is shown on the receipts and expenditure account not in income and expenditure account.  Opening balance of cash and bank is also shown in the opening balance sheet and closing cash & bank balance is shown in closing balance sheet.

B. Amount of revenue received in advance- Unearned income is not related to current year as it is received in advance so it is not included in income and expenditure account. This income is deducted from that particular type of income on the credit side of income and expenditure account.

C. Loss on sale of Asset- Gains & losses on the sale of assets are relevant and are included in the Income and Expenditure Account. Loss is recorded on the debit side of income and expenditure account.

D. Purchase of Books- Purchase of books is a capital expenditure item so it is shown in balance sheet not in income and expenditure account.

E. Depreciation of Fixed Asset- Depreciation is a non-cash expense that represents the wear and tear of fixed assets over time. It is reflected on the debit side of income and expenditure account.