Chapter-4 Bases Accounting Question no. 6, 7 and 8

Double Entry Book Keeping Ts Grewal 2019 for Class 11 Commerce Accountancy Chapter 1 - Basic Accounting Terms

Double Entry Book Keeping Ts Grewal 2021 for Class 11 Commerce

Accountancy

Chapter 4 - Bases Accounting

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Page No 4.8:

Question 6: During the financial year 2020-21, Mohan had cash sales of `90,000 and credit sales of ` 60,000. His expenses for the year were ` 70,000 out of which ` 30,000 is still to be paid.

Find out Mohan's income for 2020-21 following the Cash Basis of Accounting.

Answer:

Cash sales = `90,000

Total Expenses = `70,000

Outstanding Expenses = `30,000

Cash Expenses = `70,000 - `30,000= `40,000

Mohan's income for 2020-21= `90,000- `40,000= `50,000

Answer: Mohan's income for 2020-21= `50,000

 

Page No 4.8:

Question 7: Taking the figures given in Q. 6, find out the net income according to Accrual Basis of

Accounting.

Answer:

Cash sales = `90,000

Credit Sales =`60,000

Total Sales =90,000 + 60,000 = `1,50,000

Total Expenses = `70,000

Mohan's income for 2020-21== `1,50,000 - `70,000= `80,000

Answer: Mohan's income for 2020-21= `80,000 (On the Accrual Basis)

 

Page No 4.8:

Question 8: Vijay, a consultant, during the financial year 2020-21 earned `4,00,000. Out of which he received ` 3,50,000. He incurred an expense of ` 1,70,000, out of which `40,000 are outstanding. He also received consultancy fee relating to previous year `45,000 and also paid ` 20,000 expenses of last year.

You are required to determine his income for the year if

(i) He follows Cash Basis of Accounting, and

(ii) He follows Accrual Basis of Accounting.

 

Answer:

(i)                 He follows Cash Basis of Accounting:

Income received =3,50,000

Expenses Paid in Cash= 1,70,000 - 40,000=1,30,000

Income = Income received+ consultancy fee received – Expenses Actually Paid

Income= 3,50,000 + 45,000- (1,30,000+20,000)

Income for the year = ` 2,45,000

 

         (ii) He follows Accrual Basis of Accounting:

Income = Earing during the year – Expenses Incurred for the year

Income= 4,00,000 - 1,70,000

Income= ` 2,30,000