Question
What would be the profit as per cash basis of accounting
based on the following information: Revenues on account = Rs.50000 Cash Sales = Rs.70000 Salaries paid in cash = Rs.50000 Ticket purchased for Rs.11500 for next year travelSolution
Profit as per cash accounting will take into account all cash related transactions, irrespective of the year it relates to. Revenues on account means credit sale therefore, will be ignored since we are taking Cash basis of Accounting. As such cash profit = Cash sales – salaries paid in cash – tickets purchased                        = 70,000 – 50,000 – 11,500                        = Rs.8500 Â
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