why the cash decreased by 5 crore's?


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Assume that in July, Tata Motors paid Rs.5 Crores to an external IT consultant for a software project that took 6 months to complete. In July how much would Tata Motors' cash and net income decrease by due to this transaction? 2/3
Cash and Net Income both decrease by Rs. 83.3 Crores - Incorrect
Cash and Net Income both decrease by Rs. 5 Crores
Cash decreases by Rs. 5 Crores; Net Income decreases by Rs. 83.3 Lakhs - Correct
Cash decreases by Rs. 5 Crores, Net Income does not change


since Tata Motor's paid Rs.5 Crores to an external IT company for 6 months therefore as per by accural accounting the expense in the form of cash should decrease by 5000000/6

1 Answer(s)


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Since 5 crores was paid as cash, the cash balance of the company will decrease by 5 crores.

When it comes to expenses the 5 crores will divided by 6 months.

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