Question

During the year, X had cash sales of 3,90,000 and credit sales of 1,60,000. His expenses for the year were 2,70,000 out of which 80,000 is still to be paid. Find out X's income following cash basis of accounting.
(a) 3,90,000
(b) 1,90,000
(c) 2,00,000
(d) 1,20,000

please explain​

Answer 1

Answer:

c

Explanation:

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Answer 2

Cash basis accounting is a system where the incomes and expenditures are recorded once they are received or paid irrespective of the time of their occurrence.

Answer:

Sales=Rs.390000. [credit sales won't be recorded as it is a cash based accounting system]

expenses=270000-80000=Rs.190000

[ Rs.80000 are subtracted as they are yet to be paid and it is a cash based accounting system]

therefore

income=390000-190000

=Rs.200000(c)

Hope it helps