Question

during the financial year 2017 2018 mohan had cash sales of 90000 and credit sales of 60000. his expenses are 70000 out of which 30000 is still to be paid find out mohans income for year 2017 18 followiing the cash basis of accounting

Answer 1

The cash basis is a method of recording accounting transactions for revenue and expenses only when the corresponding cash is received or payments are made

Mohan's income =90000
Mohan's expenses =40000(70000-30000)

Hope its useful ..!!!!

Answer 2

Answer:
Mohan's income for the year on the cash basis of accounting will amount to ₹50000

Explanation:

Concept of cash basis of accounting:
The cash basis of accounting refers to a significant accounting concept in which revenues and expenses are recognized and recorded when cash is received or paid out. This is in contrast to the accrual basis of accounting, under which income is recognized when the revenue is earned, and expenses are recorded at the time they are incurred regardless of whether cash is received or paid.

Given:
Cash Sales= ₹90000
Credit Sales= ₹60000
∴ Total Sales= ₹150000
Total Expenses= ₹70000
Outstanding Expenses= ₹30000
∴ Expenses actually incurred= ₹40000

Now, according to the cash basis of accounting, only transactions about cash receipt or payment will be taken into consideration

∴ Income earned by Mohan during the financial year 2017-18 will be given by:
Cash sales during the period- Expenses incurred (paid)
= 90000-40000
= ₹50000

∴ Mohan's income for the financial year 2017-18 is ₹50000

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