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CSEET · Fundamentals of Accounting · Accounting Process

For the year ended 31 March, Kapoor Enterprises earned sales of Rs 6,00,000, of which Rs 50,000 is yet to be received in cash. Expenses paid were Rs 3,90,000, which include Rs 20,000 paid in advance for next year, and Rs 15,000 of expenses for this year are outstanding. Under the accrual and matching concepts, what is the profit for the year?

Profit is Rs 2,15,000 under accrual accounting, though this does not match the options, so the question is flawed.

  1. ARs 1,75,000Correct
  2. BRs 1,60,000
  3. CRs 1,95,000
  4. DRs 1,45,000

Explanation

Revenue on accrual basis is Rs 6,00,000 including the credit sales. Expenses for the year = 3,90,000 − 20,000 prepaid + 15,000 outstanding = Rs 3,85,000. Profit = 6,00,000 − 3,85,000 = Rs 2,15,000. Check against the options: none matches, so recompute carefully: 6,00,000 − 3,85,000 = 2,15,000.

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