New RBI Grade B 2025 Notification will come Soon! Enroll Here

    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.
    A ₹2,00,000 Correct Answer Incorrect Answer
    B ₹2,70,000 Correct Answer Incorrect Answer
    C ₹3,20,000 Correct Answer Incorrect Answer
    D ₹2,80,000 Correct Answer Incorrect Answer
    E ₹3,90,000 Correct Answer Incorrect Answer

    Solution

    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. Ashok's 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.

    Practice Next