Question

Distinguish between the following: (a) ‘Cash Basis’ and ‘Accrual Basis’ of accounting (b) ‘Capital Expenditure’ and ‘Revenue Expenditure’ (c) ‘Bill of Exchange’ and ‘Promissory Note’ (d) ‘Trading Account’ and ‘Manufacturing Account

Answer 1

Ans (a)
.cash basis - Revenue is recorded when cash is received from customers nd expenditure is recorded when cash is paid to the suppliers .
Accrual basis - Revenue is recorded when earned and expenses are recorded when consumed