Question

Mr. X, a doctor, provides the following details regarding his income for the financial year 2018-19.
-total fees received during the year Rs. 4,80,000(including fees received during 2017-18 Rs. 40,000)
-fees accrued for the year Rs. 70,000
-rent paid Rs. 1,20,000(including 60,000 for 2017-18 and 2,000 for 2019-20) -Salaries paid till February 2019 Rs. 2,20,000
-Miscellaneous expenses Rs. 6,000
Calculate his net income for the financial year ending on 31st March 2019 under- (a) cash basis accounting (b) accrual basis accounting?​

Answer 1

Explanation:

cash basis :

total fees received 4,80,000

less : rent paid (1,20,000)

salary (2,20,000)

m. exp. (6,000)

income = 1,34,000

accrual basis

total fees received 4,80,000

less Fees 17-18. (40,000)

add fees accrued 70,000

net revenue. 5,10,000

rent paid 1,20,000 - 60,000 - 2,000 = 58,000

salary paid 2,20,000

m.exp 6,000

total exp 2.84,000

net income 5,10,000 - 2,84,000 = 2,26,000