4. Vijay, a consultant during the financial year 2012-13 earned Rs.4, 00,000. Out of which he received Rs.3, 50,000. He incurred an expense of Rs.1, 70,000, out of Rs. 40,000 are outstanding. He also received consultancy fee relating to previous year Rs. 45,000 and also paid Rs.20, 000 expenses of the last year. You are required to determine his income for the last year if: i)he follows Cash Basis of Accounting and ii)he follows Accrual Basis of Accounting.

Dear student cash basis: Total amount of cash received and paid for the period is taken. No adjustment needed for outstanding or advance receipt or payment to be made. Receipt - 350000+45000 = 395000 Payment - 130000+20000 = 150000 Net Income - 350000+45000-130000-20000= 245000 Accrual basis: Here all the adjustments are to be made and only the actual amount for the period to be taken for calculation of receipt and payment. Prior period adjustments are not required. Receipt - 350000+50000 = 400000 Payment - 130000+40000 = 170000 Income - 400000-170000 = 230000. Regards