Discuss for question (a) and (b)- Define and identify the type of Inco

1.	Discuss for question (a) and (b)- Define and identify the type of Income / Expenses- Treatment of the Income / Expenses in the Profit and Loss account, Impact of theIncome / Expenses in the Balance Sheeta. You purchased 10 shares of L& T Company last year. On 5th March 2019, the company has declared a dividend Rs 50 per share. The income is earned but not yet collected in your account during this financial year. (5 Marks)b. On 5th March 2019, Mehta Brothers received 100% advance for goods, to be supplied in the next month. The Cost of the goods was Rs50000. They usually sells the goods at10% mark up.
Answer» Answer: • Identification of Income: It is an Accrued Income. • Definition: Accrued income is a revenue that has been earned but has yet to be RECEIVED. Examples: Dividend declared by company but not received yet (Financial year), INTEREST earned by company but not received at the end of Financial year. • Treatment of accrued income: In profit & loss account it has been posted in credit side as an income ‘Dividend Income’ In BALANCE sheet it has been shown as an Assets (Current Asset) Shows it on the credit side of the Income Statement (profit & loss account) as it is an income for the current Accounting period (just not received yet). Shows it on the asset side of the Balance Sheet under the head “Current Assets”. PARTICULAR Debit/Credit Impact Accrued Income A/C Debit Debit the increase in Asset To Income A/C Credit Credit the increase in income Journal ENTRY: Date Particular Dr/Cr Debit Credit 05TH March,2019 Dividend Receivable a/c Dr 500 To Dividend income a/c Cr 500 (Being dividend earned but not received yet) Explanation: may its help u

Discuss for question (a) and (b)- Define and identify the type of Income / Expenses- Treatment of the Income / Expenses in the Profit and Loss account, Impact of theIncome / Expenses in the Balance Sheeta. You purchased 10 shares of L& T Company last year. On 5th March 2019, the company has declared a dividend Rs 50 per share. The income is earned but not yet collected in your account during this financial year. (5 Marks)b. On 5th March 2019, Mehta Brothers received 100% advance for goods, to be supplied in the next month. The Cost of the goods was Rs50000. They usually sells the goods at10% mark up.

Answer»

Answer:

• Identification of Income: It is an Accrued Income.

• Definition: Accrued income is a revenue that has been earned but has yet to be RECEIVED.

Examples: Dividend declared by company but not received yet (Financial year), INTEREST earned by company but not received at the end of Financial year.

• Treatment of accrued income: In profit & loss account it has been posted in credit side as an income ‘Dividend Income’

In BALANCE sheet it has been shown as an Assets (Current Asset)

Shows it on the credit side of the Income Statement (profit & loss account) as it is an income for the current Accounting period (just not received yet).

Shows it on the asset side of the Balance Sheet under the head “Current Assets”.

PARTICULAR Debit/Credit Impact

Accrued Income A/C Debit Debit the increase in Asset

To Income A/C Credit Credit the increase in income

Journal ENTRY:

Date Particular Dr/Cr Debit Credit

05TH March,2019 Dividend Receivable a/c Dr 500

To Dividend income a/c Cr 500

(Being dividend earned but not received yet)

Explanation:

may its help u

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