Question
During the financial year 2023-24, A had cash sales of
₹3,90,000 and credit sales of ₹1,60,000. His expenses for the year were ₹2,70,000, out of which ₹80,000 is still to be paid. Find out Ashok's income for 2023-24 following the Cash Basis of Accounting.Solution
Under the Cash Basis of Accounting, only cash inflows and outflows are considered. A's cash income is calculated by subtracting the actual cash expenses (₹1,90,000) from the cash revenues (₹3,90,000), resulting in a net income of ₹2,00,000.
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