Question

expenses paid : Rs. 1,80,000 expenses paid in advance(not included in above) : Rs. 20,000 expenses not yet paid : Rs. 10,000 income received : Rs. 2,40,000 income received in advance(included in income received) : Rs. 15,000 income not yet received : Rs. 12,00 How to find net income or profit using 1) cash basis of accounting and 2) accrual basis of accounting

Answer 1

Answer:

1)cash basis: 60000

2)accrual basis: 67000

Explanation:

1)in cash basis,

we only include the expenses paid and income received.

thus, net profit=income -expenses

=240000-180000

=60000

2)in accrual basis,

net profit =(income received+ income not yet received -income paid in advance) - (expenses paid-expense paid in advance+ expenses yet to be paid)

=(240000+12000-15000)-(180000-20000+10000)

=(237000)-(170000)

=67000