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Page No 5.8:

Question 1:

Answer:

Calculation of Mohan’s income for the year 2016-2017 as per the Cash Basis of Accounting

 

Particulars

Amount

(Rs)

Revenue (i.e. Cash Sales)

90,000

Less: Expenses (70,000 – 30,000)

40,000

Income/Profit during the year

50,000

 

 

 

Thus, Income of Mohan for the year 2016-2017 is Rs 50,000.

 

Note: If cash basis of accounting is followed, then credit sales and outstanding expenses are not accounted.

Page No 5.8:

Question 2:

Calculation of Mohan’s income for the year 2016-2017 as per the Cash Basis of Accounting

 

Particulars

Amount

(Rs)

Revenue (i.e. Cash Sales)

90,000

Less: Expenses (70,000 – 30,000)

40,000

Income/Profit during the year

50,000

 

 

 

Thus, Income of Mohan for the year 2016-2017 is Rs 50,000.

 

Note: If cash basis of accounting is followed, then credit sales and outstanding expenses are not accounted.

Answer:

Calculation of Mohan’s income for the year 2016-2017 as per the Accrual Basis of Accounting

 

Particulars

Amount

(Rs)

Revenue (i.e. Cash Sales + Credit Sales)

1,50,000

Less: Total Expenses

70,000

Income/Profit during the year

80,000

 

 

 

Thus, Net Income of Mohan for the year 2016-2017 is Rs 80,000

Page No 5.8:

Question 3:

Calculation of Mohan’s income for the year 2016-2017 as per the Accrual Basis of Accounting

 

Particulars

Amount

(Rs)

Revenue (i.e. Cash Sales + Credit Sales)

1,50,000

Less: Total Expenses

70,000

Income/Profit during the year

80,000

 

 

 

Thus, Net Income of Mohan for the year 2016-2017 is Rs 80,000

Answer:

(i) Calculation of Naren’s income for the year 2016-2017 as per the Cash Basis of Accounting

Particulars

Amount

(Rs)

Revenue (i.e. Income Received)

2,40,000

Less: Expenses (i.e. Expenses paid + Expenses paid in advance)

2,00,000

Income/Profit during the year

40,000

 

 

 

Thus, Net Income of Naren for the year 2016-2017 is Rs 40,000.

 

(ii) Calculation of Naren’s income for the year 2016-2017 as per the Accrual Basis of Accounting

Particulars

Amount

(Rs)

Revenue

 (i.e. Income Received + Income not yet received – Income received in advance)

2,37,000

Less: Expenses (i.e. Expenses paid + Expenses not yet paid)

1,90,000

Income/Profit during the year

47,000

 

 

 

Thus, Net Income of Naren for the year 2016-2017 is Rs 47,000.

Page No 5.8:

Question 4:

(i) Calculation of Naren’s income for the year 2016-2017 as per the Cash Basis of Accounting

Particulars

Amount

(Rs)

Revenue (i.e. Income Received)

2,40,000

Less: Expenses (i.e. Expenses paid + Expenses paid in advance)

2,00,000

Income/Profit during the year

40,000

 

 

 

Thus, Net Income of Naren for the year 2016-2017 is Rs 40,000.

 

(ii) Calculation of Naren’s income for the year 2016-2017 as per the Accrual Basis of Accounting

Particulars

Amount

(Rs)

Revenue

 (i.e. Income Received + Income not yet received – Income received in advance)

2,37,000

Less: Expenses (i.e. Expenses paid + Expenses not yet paid)

1,90,000

Income/Profit during the year

47,000

 

 

 

Thus, Net Income of Naren for the year 2016-2017 is Rs 47,000.

Answer:

(i) Calculation of Mohan’s income for the year 2016-2017 as per the Cash Basis of Accounting

Particulars

Amount

(Rs)

Revenue (i.e. Income Received)

1,20,000

Less: Expenses (i.e. Expenses paid)

80,000

Income/Profit during the year

40,000

 

 

 

Thus, Net Income of Mohan for the year 2016-2017 is Rs 40,000.

(ii) Calculation of Mohan’s income for the year 2016-2017 as per the Accrual Basis of Accounting

Particulars

Amount

(Rs)

Revenue

(i.e. Income Received + Income earned but not year received – Income Received in Advance)

1,17,000

Less: Expenses (i.e. Expenses paid + Outstanding Expenses – Expenses paid in advance)

70,000

Income/Profit during the year

47,000

 

 

 

Thus, Net Income of Mohan for the year 2016-2017 is Rs 47,000.

Page No 5.8:

Question 5:

(i) Calculation of Mohan’s income for the year 2016-2017 as per the Cash Basis of Accounting

Particulars

Amount

(Rs)

Revenue (i.e. Income Received)

1,20,000

Less: Expenses (i.e. Expenses paid)

80,000

Income/Profit during the year

40,000

 

 

 

Thus, Net Income of Mohan for the year 2016-2017 is Rs 40,000.

(ii) Calculation of Mohan’s income for the year 2016-2017 as per the Accrual Basis of Accounting

Particulars

Amount

(Rs)

Revenue

(i.e. Income Received + Income earned but not year received – Income Received in Advance)

1,17,000

Less: Expenses (i.e. Expenses paid + Outstanding Expenses – Expenses paid in advance)

70,000

Income/Profit during the year

47,000

 

 

 

Thus, Net Income of Mohan for the year 2016-2017 is Rs 47,000.

Answer:

No, the accounting is not correct because as per accrual basis, income, if earned or accrued during the period whether received or not is considered as the income of the said period and similarly, the expense will be accounted in the books of accounts of the year when the service is actually taken and not in the period in which payment is made for it.
Therefore as per accrual basis, accounting is not correct.



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