The surplus or deficit revealed by income and expenditure account is transferred to:

The correct answer is Capital fund.

Key Points

• A non-trading company's surplus or deficit can be determined by comparing the income and spending for a certain accounting period, which is what a "income and expenditure account" does.
• The income and expense account's remaining balance is moved to the balance sheet.
• The capital fund is added to the balance sheet's surplus balance.

Important Points

"When an Income and Expenditure account is closed, the surplus or deficit that was recorded there is transferred to a Capital fund account.''