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An accountant...

Question

An accountant advised his client, who is a doctor to maintain his accounts on the cash basis. Is the advice of accountant correct?

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Solution

Yes, the advice given by the accountant is correct as cash basis of accounting is more appropriate for a doctor as he receives his fee in cash.

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Q. Mr. Chaturvedi maintains two bank accounts. Prepare his columnar cash book from the following particulars:

2016		(₹)
May 1	Cash in hand	34,000
	Balance with Hongkong Bank	75,200
	Balance with Citi Bank	1,20,000
May 3	Cash drawn from Citi Bank for office use	25,000
May 8	Sold goods to Diwedi for ₹ 80,000 and received from him ₹ 20,000 in cash and a cheque for the balance. The cheque is deposited in Hongkong Bank on 9th and the bank credited the amount on 15th and debited ₹ 25 as its collection charges.
May 12	Purchased goods for ₹ 40,000 at 20% trade discount. 25% of the amount is paid in cash and issued a cheque on Citi Bank for the balance amount.
May 20	Paid Wages ₹ 36,000 and Salary ₹ 4,000.
May 22	A cheque for ₹ 50,000 is drawn on Citi Bank and it is deposited in Hongkong Bank.
May 23	Purchased land for ₹ 3,20,000 and a cheque is issued on Hongkong Bank.
May 24	A cheque for ₹ 10,000 which was received from Mohan and was deposited in Citi Bank on 25th April is dishonoured and the bank debited ₹ 100 as bank charges on this cheque. The amount of dishonoured cheque and bank charges is received from Mohan in cash on 25th.
May 26	Deposited cash ₹ 30,000 in Hongkong Bank.
May 28	Sold old typewriter for ₹ 2,000 and old newspapers for ₹200 in cash.
May 30	Interest charged by Hongkong Bank ₹ 400.
May 31	Bank charges by Citi Bank ₹ 180 and Hongkong Bank ₹ 340.

Q. A trader maintains his books of accounts on Single Entry basis. His books of accounts show that his total purchases during the year were Rs. 90,000 of which he returned goods worth Rs. 10,000. His credit sales were Rs. 50,000 and cash sales were Rs. 80,000 of the total sales goods returned were Rs. 30,000. Closing stock is Rs. 12,000. He sells his goods at cost plus 33.33%. His opening stock is?

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