Question

Increases in owners equity arising from increase in assets received in exchange for the delivery of goods or rendering of services to customers is termed as ________.

• A. Revenue
• B. Gain
• C. Expenses
• D. Loss

Answer 1

The correct option is A Revenue

Goods or services rendered in exchange of cash (asset) to a customer is termed as revenue. Incremental amount over cost is termed as profit which is part of owners equity, hence owners equity increases. For example, goods worth Rs.2000 sold against cash. Cost price of the goods is Rs.1800. In such situation:

Revenue is Rs.2000

Profit is Rs.200

Cash (asset) increases by Rs.2000

Owners Equity increases by Rs.200