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Question 3 Chapter 2 – Unimax Publications of Class 11
Atul , a consultant, during the financial year 2019-20 earned Rs. 4,00,000. Out of which be received Rs. 3,50,000. He incurred an expense of Rs. 1,70,000, out of which Rs. 40,000 are outstanding. He also received consultancy fee relating to previous year Rs. 45,000 and also paid Rs. 20,000 expenses of last year. You are required to determine his income for the year, if
(a) He follows Cash Basis of Accounting and
(b) He follows Accrual Basis of Accounting.
The solution of Question 3 Chapter 2 – Unimax Publications of Class 11
| Rs | |
| (a) Revenues (Inflow of Cash i.e. Cash Sales) | 3,50,000 |
| Less: Expenses (Outflow of Cash) (1,70,000-40,000) | 1,30,000 |
| Income | 2,20,000 |
| Add: Other (Inflow of Cash) (45,000-20,000) | 25,000 |
| Net Income | 2,45,000 |
| (b) Total Sales of the year | 4,00,000 |
| Total Expenses for the year | 1,70,000 |
| Net Income = | 2,30,000 |
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