Explanation:

- Option 1: Revenue nature only

- Typically refers to the day-to-day income and expenses.

- Covers regular, ongoing activities and operations.

- Does not consider capital income or expenditures.

- Option 2: Capital nature only

- Involves transactions related to assets, investments, or long-term benefits.

- Not focused on regular operational activities.

- Option 3: Both revenue and capital nature

- Encompasses all financial transactions, both operational and long-term.

- Generally not how Income and Expenditure Accounts are structured.

- Option 4: Income of only revenue nature and expenditure of revenue and capital nature

- Records all revenue income, but includes both revenue and capital expenditures.

- Reflects true financial performance and position.

- ? Correct understanding of the Income and Expenditure Account.