Bases of Accounting-Accountancy-Class XI-Assignment

Q..1           A, during a financial year 2007 made sales and earned income of Rs 10,00,000. It included credit sales of Rs 3,00,000 and 1,00,000 received pertaining to the previous accounting year. The expenses paid were Rs 2,00,000 out of which 50,000 pertains to previous years rent. However Rs 20,000 salary has not been paid of the current financial year.

            Calculate the amount of profit earned as per:-

(a)   Cash basis of accounting

(b)   Accrual basis of accounting

Q..2           Ram, during a financial year 2013 made sales of Rs 25, 00,000. It included credit sales of Rs 9, 00,000 and 5, 00,000 received as advance for an order received. The purchases made were Rs 8, 00,000 out of which 3, 00,000 were credit purchases. Of the other expenses incurred i.e. 70,000, 8,000 is paid as advance salaries.

            Calculate the amount of profit earned as per:-

(a)   Cash basis of accounting

(b)   Accrual basis of accounting

Q3. Differentiate between Cash and Accrual Bases of Accounting?