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Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.?
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Mohan a charted accountant during the financial year 2018-19 earned rs...
In accrual basis all the transaction records whether it is cash or credit transactions and but in cash basis only money or said to be cash transactions only recorded
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Mohan a charted accountant during the financial year 2018-19 earned rs...
Introduction:
The question asks whether Mohan follows the cash basis of accounting or the accrual basis of accounting. To determine this, we need to analyze the transactions and their treatment under both methods.
Explanation of Cash Basis of Accounting:
Under the cash basis of accounting, revenue and expenses are recognized only when cash is received or paid. This means that transactions are recorded based on actual cash inflows and outflows.
Analysis of Mohan's Transactions:
1. Revenue:
- Mohan earned Rs 400,000 during the financial year 2018-19.
- He received Rs 350,000, and the remaining Rs 50,000 is still outstanding.
2. Expenses:
- Mohan incurred expenses of Rs 170,000 during the financial year.
- Out of this, Rs 40,000 is still outstanding.
3. Consultancy Fee relating to previous year:
- Mohan received Rs 45,000 as consultancy fee relating to the previous year.
4. Expenses of last year:
- Mohan paid Rs 20,000 as expenses of the last year.
Analysis under Cash Basis of Accounting:
Under the cash basis of accounting, revenue is recognized when cash is received, and expenses are recognized when cash is paid. Based on the given information, we can analyze Mohan's transactions:
1. Revenue:
- Mohan received Rs 350,000 during the financial year, so this amount will be recognized as revenue.
2. Expenses:
- Mohan paid Rs 170,000 during the financial year, so this amount will be recognized as expenses.
3. Outstanding Transactions:
- The outstanding revenue of Rs 50,000 and outstanding expenses of Rs 40,000 will not be recognized under the cash basis of accounting as cash has not been received or paid for these transactions.
4. Consultancy Fee relating to previous year:
- The consultancy fee of Rs 45,000 received relating to the previous year will not be recognized under the cash basis of accounting as it pertains to a prior period.
5. Expenses of last year:
- The expenses of Rs 20,000 paid for the last year will not be recognized under the cash basis of accounting as it pertains to a prior period.
Conclusion:
Based on the analysis of Mohan's transactions, it can be concluded that Mohan follows the cash basis of accounting as he recognizes revenue and expenses only when cash is received or paid. Transactions such as outstanding revenue, outstanding expenses, consultancy fee relating to the previous year, and expenses of the last year are not recognized under the cash basis of accounting.
The question asks whether Mohan follows the cash basis of accounting or the accrual basis of accounting. To determine this, we need to analyze the transactions and their treatment under both methods.
Explanation of Cash Basis of Accounting:
Under the cash basis of accounting, revenue and expenses are recognized only when cash is received or paid. This means that transactions are recorded based on actual cash inflows and outflows.
Analysis of Mohan's Transactions:
1. Revenue:
- Mohan earned Rs 400,000 during the financial year 2018-19.
- He received Rs 350,000, and the remaining Rs 50,000 is still outstanding.
2. Expenses:
- Mohan incurred expenses of Rs 170,000 during the financial year.
- Out of this, Rs 40,000 is still outstanding.
3. Consultancy Fee relating to previous year:
- Mohan received Rs 45,000 as consultancy fee relating to the previous year.
4. Expenses of last year:
- Mohan paid Rs 20,000 as expenses of the last year.
Analysis under Cash Basis of Accounting:
Under the cash basis of accounting, revenue is recognized when cash is received, and expenses are recognized when cash is paid. Based on the given information, we can analyze Mohan's transactions:
1. Revenue:
- Mohan received Rs 350,000 during the financial year, so this amount will be recognized as revenue.
2. Expenses:
- Mohan paid Rs 170,000 during the financial year, so this amount will be recognized as expenses.
3. Outstanding Transactions:
- The outstanding revenue of Rs 50,000 and outstanding expenses of Rs 40,000 will not be recognized under the cash basis of accounting as cash has not been received or paid for these transactions.
4. Consultancy Fee relating to previous year:
- The consultancy fee of Rs 45,000 received relating to the previous year will not be recognized under the cash basis of accounting as it pertains to a prior period.
5. Expenses of last year:
- The expenses of Rs 20,000 paid for the last year will not be recognized under the cash basis of accounting as it pertains to a prior period.
Conclusion:
Based on the analysis of Mohan's transactions, it can be concluded that Mohan follows the cash basis of accounting as he recognizes revenue and expenses only when cash is received or paid. Transactions such as outstanding revenue, outstanding expenses, consultancy fee relating to the previous year, and expenses of the last year are not recognized under the cash basis of accounting.
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Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.?
Question Description
Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.?.
Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.?.
Solutions for Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? in English & in Hindi are available as part of our courses for Commerce.
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Here you can find the meaning of Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? defined & explained in the simplest way possible. Besides giving the explanation of
Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.?, a detailed solution for Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? has been provided alongside types of Mohan a charted accountant during the financial year 2018-19 earned rs 400000 out of which he received rs 350000 he incurred an expense of rs 170000 out of which rs 40000 are outstanding. He also received consultancy fee relating to previous year rs 45000 and also paid Rs 20000 expenses of last year. a) he follows cash basis of accounting b) he follows accrual basis of accounting.? theory, EduRev gives you an
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