Income and expenditure accounts do not appear on a balance sheet because they do not represent an asset, liability, or form of shareholder equity. Also known as “temporary accounts” or “nominal accounts,” income and expenditure accounts close at the end of a reporting period, making them irrelevant to the purpose of a balance sheet.
Balance sheets also do not include off-balance sheet (OBS) items, such as unused commitments or letters of credit, as these items could expose the business to various risks and are not considered liabilities.