What is an income-expenditure account?
An income-expenditure account is also known as an income surplus account, or EÜR for short. This calculation simplifies the determination of the profit of a company, regardless of whether it is a sole proprietorship or a large commercial enterprise. Only the operating income and operating expenses of a completed calendar year are recorded. It does not matter whether the income and expenses were made in cash or by transfer or direct debit. The income-expenditure calculation is only used by companies in the commercial sector.
The profit or loss in the income-expenditure account is determined as the difference at the end of the year between all sums of operating income and operating expenses.
It is also important to know: Acquisition and production costs can only be deducted from the income tax return if they have actually been removed from the business assets.
Required records in the income-expenditure account:
Companies and the self-employed, including all professions that use an income-expenditure account, must keep the following records:
- List of all operating income and operating expenses
- Cash register (if available)
- The incoming goods book must also be kept if goods are purchased for production purposes or the like
- Attachment directory
- If employees are employed, a payroll account must also be kept and displayed
Records must also be kept for sales tax purposes. It is advisable to include these records as part of the income-expenditure account in order to have all the necessary information ready.
It should also be noted that all companies that also keep books and records for tax purposes must also list all cash receipts individually. The companies, which also book cash receipts, have to use an electronic recording system for this purpose, for example in the form of a cash register. However, this rule only applies if the company’s annual turnover is 15,000 euros or more and the cash turnover exceeds an amount of 7,500 euros. In addition, companies that use an income-expenditure account are not obliged to take an inventory at the end of the year.
In the income-expenditure account, all income and expenses are to be recorded on an ongoing basis. There are several options for implementing this requirement to record the company’s income and expenses. With the tax return, for example, sole proprietorships must submit a so-called E1a form as an attachment. In this form, a corresponding breakdown of the operating income and expenses is given. If the company’s ongoing records are adapted to this classification scheme, additional work in the income tax return can be avoided.
The Income-Expenditure Journal
According to Sportingology, another variant of the income statement is the income-expenditure journal. This is created like a directory in which all cash and cashless (e.g. transfers and direct debits) financial transactions are listed. In addition, it can make sense to also enter expenses in an expense list and integrate this into the income-expenses journal.
In addition, the following information does not have to be listed in a journal:
- Private deposits and withdrawals
- Money movements between the cash register and banks
- Acquisition costs of goods that are sold do not have to be listed either.
Regardless of which variant of the recording is selected, the presentation can be in individual categories.
Obligation to keep a goods receipt book
Companies that determine their income and expenses using the income-expenditure account are legally obliged to keep a goods receipt book. All goods that the company purchases must be entered in this book. It does not matter whether the company just resells the goods or processes them into an end product. This duty to keep records also applies to goods that the company usually only resells, but occasionally also purchases for private purposes.
The entries in the register of goods must be made in the correct chronological order and the amounts must be added up both monthly and annually. As already mentioned, the current inventory does not have to be recorded at the end of the year, since users of the income-expenditure invoice are not obliged to perform this inventory. Not even if they keep a register of goods.
Keeping an attachment directory for income-expenditure calculators
In order to have proof of the annual depreciation, the income-expenditure calculator must also keep a list of the assets used in the company, the depreciable fixed assets. This directory mainly concerns production companies. The following information must be given in such an annex:
- Designation of the individual asset
- Name and address of the supplier
- Date of acquisition
- Manufacturing costs
- Amount of the annual deduction in the area of wear and tear
- Estimated useful life
- Residual book value (or the still deductible amount)
If the entire asset has now been written off, but is still used, a reminder value must be noted in the asset register. This can be a cent, for example.