method of accounting-Cash Vs merchantile

In this nov 2010 IPCC exam, a question appeared giving receipts and payments a/c and asking us to compute income from PGBP. It was a total income problem.

Many of my friends opened profit and loss a/c and calculated profit as per merchentile system.

because of time lag, I arrived at profit directly by following cash system of accounting, which is permissable as per IT act as per sec 145, which says that assesee can either follow cash or mechantile system of accounting but not hybrid.

can the question be aswered in this way, i.e., arriving at profit following cash system of accounting?

Replies (2)

yes its allowed but i dont think in any of the problems in the scanner orinstitute's compiler they used this method...hmmmm

thats the reason i got the doubt

Thanks sneha

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