Explain the uses of Income and Expenditure Account.

The main uses of Income and Expenditure Account are as follows:

1. Ascertaining surplus or deficit — The Income and Expenditure Account shows the surplus or deficit arising from the activities of a non-trading organisation.

2. Showing all incomes and expenses — It shows all items of income and expenditure on revenue account in a systematic manner. With the help of this information, the management can take steps to increase income and reduce expenditure.

3. Basis for preparing the Balance Sheet — It serves as the basis for preparing the Balance Sheet of a non-trading organisation.

4. Comparison between years — By comparing I&E accounts of successive years, the management can identify trends in income and expenditure, evaluate growth and detect problems early.

5. Fulfilling statutory requirements — Non-trading organisations are legally required to prepare an Income and Expenditure Account under various statutes. Hence, it fulfils statutory obligations.

6. Transparency and accountability — It provides transparency about the financial activities of the organisation to members, donors and regulators, thereby strengthening accountability.