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ram made cash sale of $2,50,000 and credit sale of $1,50,000 . his expense for the year were $50,000 out of which $10,000 is yet to be paid . ram's income on the basis of cash basis......,.

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Answered by takurprem20684

Answer:

Cash Basis of Accounting:

Transactions are recorded only when cash is transacted.

Enterprises following cash basis of accounting prepare Receipt and Payment account.

The difference between the cash receipts and cash payments is the profit or loss.

Suitable for enterprises where most of the transactions are on a cash basis.

Organisations that follow cash basis of accounting includes non-trading organisations, charitable institutions, clubs, etc.

Illustration: Ms.Meera has made cash sales Rs.65,000 and credit sales Rs.30,000. Expenses incurred Rs.25000 out of which Rs.4000 is yet to be paid. Calculate net income following the cash basis of accounting. In this case Ms. Meera will make net income of Rs.44,000(65000-21000).Credit sales of Rs.30,000 and Expenses of Rs.4000 out of Rs.25000 will not be considered under cash basis of accounting as they are not the actual cash flows.

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ram made cash sale of $2,50,000 and credit sale of $1,50,000 . his expense for the year were $50,000 out of which $10,000 is yet to be paid . ram's income on the basis of cash basis......,.​

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ram made cash sale of $2,50,000 and credit sale of $1,50,000 . his expense for the year were $50,000 out of which $10,000 is yet to be paid . ram's income on the basis of cash basis......,.