Expected life for the entity = 10 years 

2016 ------------------ 2017 --------------------2018 ------------2019 -------------------

monthly accounting periods        اقسم حياة المنشاة لاشهر ( كل شهر يمثل فترة محاسبية منفصلة)
quarterly accounting period        اقسم حياة المنشاة لارباع سنوات ( كل 3 اشهر يمثل فترة محاسبية منفصلة
Semi-annual accounting periods  اقسم حياة المنشاة انصاف سنوات ( كل 6 شهر يمثل فترة محاسبية منفصلة
annual accounting periods            اقسم حياة المنشاة لسنوات ( كل سنة يمثل فترة محاسبية منفصلة

monthly/ semiannually/ quarterly  --------- interm periods 
annual accounting periods ( 12 months )
calendar year  
1/1/2019------------------ 31/12/ 2019               annual accounting period 
1/1/2020 -------------------31/12/2020
1/1/2021 -------------------31/12/2021

fiscal year 
1/5/2019 --------------30/4/2020
1/5/2020 -------------30/4/2021

or 
1/6/2019 ----------------31/5/2020
1/6/2020 --------------- 31/6/2021

Accrual VS Cash basis of accounting 

there are two accounting basis:
1- accrual basis  اساس الاستحقاق 
لا يشترط ان يكون احد اطراف القيد نقد حتى اقوم بتسجيله 

Services performed on account :

Dr acc rec 
  Cr service rev 

received a utility bill on account 
Dr utility exp 
  Cr acc pay 

Allowed under IFRS 

2- cash basis اساس النقد 
يشترط ان يكون احد اطراف القيد نقد حتى اقوم بتسجيله

Services performed on account :
no entry 

customers paid in cash the amount resulted form providing services 
Dr cash 
   Cr service rev 

received a utility bill on account
no entry 

paid the amount resulted from the usage of utility 
Dr utility exp 
   Cr cash 

No allowed under IFRS 

E3-3)
2020 : 
      collected 108,000 from customers 

25,000 related to                         108,000 – 25,000 = 83,000         
services performed in                     services performed in             
2019                                   2020

During 2020, the company performed services 36,000 on account . 

2020 : 
      paid 72,000 to vendors  

30,000 related to                    72,000 – 30,000 = 42,000       
expense incurred in                  expense incurred in 
2019                             2020

During 2020, the company incurred expense 42,000 on account .

Required: 
1- calculate cash basis net income (2020)

net income ( 2020) = cash Rev (2020) –cash exp (2020)
               = 108,000 – 72,000 
               = 36,000

2- calculate accrual basis net income (2020) 
net income (2020) = accrual revenue (2020) – accrual exp (2020)
               = (83,000+36,000) – (42,000 + 42,000) 
               = 119,000 – 84,000 
               = 35,000 

Dr exp                       income statement  
 cr acc pay                   balance sheet