wiz-icon
MyQuestionIcon
MyQuestionIcon
4
You visited us 4 times! Enjoying our articles? Unlock Full Access!
Question

Outstanding and prepaid expenses and incomes are taken into account in determining profit or loss under _________________.

A
Cash system of accounting.
No worries! We‘ve got your back. Try BYJU‘S free classes today!
B
Mercantile system of accounting.
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
C
Both (A) and (B).
No worries! We‘ve got your back. Try BYJU‘S free classes today!
D
None of the above.
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
Solution

The correct option is C Mercantile system of accounting.
Accrual system of Accounting is also known as the mercantile system of accounting wherein the transactions are recognized and recorded as and when they take place.
Under the accrual accounting method, the revenue is recorded when it is actually earned, and the expenses are reported when they are incurred.
Hence,Outstanding and prepaid expenses and incomes are taken into account in determining profit or loss under mercantile /Accrual system of accounting.

flag
Suggest Corrections
thumbs-up
0
similar_icon
Similar questions
View More
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Introduction to Cash Flow Statement
ACCOUNTANCY
Watch in App
Join BYJU'S Learning Program
CrossIcon