Accounting for Grant

1. You have to prepare Income & Expenditure account instead of Profit & Loss A/c

2. All Expenses should be shown at expenses side only

3. Income should be booked on pro rata basis means only expended or receipt should be credited as  Income and the unutilised grant will be used in income in next year.

4. When you received any amount as grant credit the personal account of  person/agency. at the time of year end / project end make a Bill in favour of the funding agency. make the entry by debiting personal account  and credit to Income side.