Introduction To Accounting: Part 18: Revenue Recognition Concept Or Realisation Concept

Nishant Kumar
28 Jun 0 0
  1. According to the Revenue Recognition Concept, revenue is considered to have been realised when a transaction has been entered into and the obligation to receive the amount has been established.

  2. It is to be noted that recognising revenue and receipt of an amount are two separate aspects.

  3. Examples:

  • An enterprise sells goods in December, 2017 and receives the amount in April, 2018. Revenue of this sales should be recognised in December, 2017, i.e. when the goods are sold. It is so because the legal obligation has been established (upon sales) in December, 2017.

  • Suppose, an enterprise has received an advance in December, 2017 for sales to be made in April, 2018. In this case, revenue shall be recognised in April, 2018, when the sale will take place because the legal obligation to receive the amount would be established in April, 2018.

 

0 Dislike
Follow 0

Please Enter a comment

Submit

Other Lessons for You

Evolution And Adaptive Radiation: The Basics
Adaptive Radiation: Evolution is a process of change in all forms of life over generations. Evolutionary biology is the study of how evolution occurs. Biological Evolution: Any genetic change in a population...

Niranjana S. | 13 Sep

1 0
0
Accounting Under Single Entry System-Introduction
Many small, simple business maintain the books of accounts under Single entry system that records bare essentials. In some cases only records of cash, accounts receivable, accounts payable and taxes paid...

Vishwanatha R | 13 Sep

0 0
0
Chemisty Packing Fraction
Explain packing fraction. Packing fraction is defined as a way of expressing the variation of isotopic mass from whole mass number (atomic mass). This fraction can have positive or can have negative sign. A...

Nidhi T. | 26 Aug

0 0
0
Electrostatic
Electrostatic is study about the charge. In electrostatic we study about when charge at rest. Charge: Charge is important point for study about electrostatic.charge is a scaler quintity. And the unit of...
Lesson 1: Multiplication Trick: Multiply Quickly Without Any Error
Vedic Maths: Multiplication tips and tricks Introduction : Founder of Vedic maths is Swami Bharti Krishna Tirath jee Maharaj who was a great saint. With the help of these tri Nikhilam Sutra(Base method). Anurupyena...

Pankaj Kumar | 23 Aug

1 0
0

Looking for Class XI-XII Tuition (PUC) ?

Find best Class XI-XII Tuition (PUC) in your locality on UrbanPro.

Do you offer Class XI-XII Tuition (PUC) ?

Create Free Profile »
Sponsored

Find Best Class XI-XII Tuition (PUC) ?

Find Now »