Question

During the financial year 2019-20,Amit had cash sales of Rs 3,90,000 and credit sales of
Rs 1,50,000.His expenses were Rs 2,00,000 out of which Rs 50,000 is still to be paid.
Find out Amit’s income for 2019-20 if
(a)he follows Cash Basis of Accounting and
(b)he follows Accrual Basis of Accounting

Answer 1

Answer:

a) cash basis of accounting

income=sale - expenses

=390000-150000

= 240000

b) accrual basis of accounting

income = 540000-200000=300000

in final accounts 50000 is outstanding expenses