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 Accrual Basis of Accounting.

Q: Answer-During the financial year 2023-24, A had cash sales of ₹3,90,000 and credit sales of ₹1,60,000. His...

Under the Accrual Basis of Accounting, both cash and credit transactions are considered, regardless of whether cash has been received or expenses have been paid. Ashoks net income is calculated by subtracting the total expenses 2,70,000 from the total sales 5,50,000, resulting in a net income of 2,80,000.