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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
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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.
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May 26	Deposited cash ₹ 30,000 in Hongkong Bank.
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May 30	Interest charged by Hongkong Bank ₹ 400.
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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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