Income and Expenditure Account for Non-Profits

Steps:

• Identify the account's purpose: It records revenues and expenses for a non-profit like a tennis club to show surplus or deficit.
• Distinguish from other accounts: Exclude cash-based receipts/payments, capital items, and balance sheet elements.
• Review options: Match each to accrual-based operating incomes/expenses.
• Select the fitting item: Choose the one representing operational profit included in the account.

Why D is correct:

• Per accounting standards for non-profits (e.g., IAS 1 adapted), the income and expenditure account includes all operating surpluses like club shop profit as revenue.

Why the others are wrong:

• A: Receipts and payments are cash book entries, not accrual-based income/expenditure.
• B: Capital items affect the balance sheet, not the operating income/expenditure account.
• C: Accumulated fund balances are balance sheet equity, not part of the income/expenditure statement.

Final answer: D