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    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 travel

    A 8000 Correct Answer Incorrect Answer
    B 8500 Correct Answer Incorrect Answer
    C 70000 Correct Answer Incorrect Answer
    D 58500 Correct Answer Incorrect Answer
    E 10000 Correct Answer Incorrect Answer

    Solution

    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  

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