Answer to Question #142777 in Accounting for neha singh

Question

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 at
10% mark up.

Answer 1

Under the accrual method, an advance received or paid is not revenue or expense. In the cash method, an advance is an income or expense. Accordingly, in the accrual method, this is a receivable or payable, in the cash method-this is revenue and cost