Question

Revenue from sale of goods should be recognized when________.

• A. Goods sold have been actually delivered.
• B. Payment for goods sold has been received.
• C. Property in goods has been transferred to the buyer and it is not unreasonable to expect collection.
• D. Any of the above.

Answer 1

The correct option is C Property in goods has been transferred to the buyer and it is not unreasonable to expect collection.

AS-9 deals with the bases for recognition of revenue in the statement of profit and loss of an enterprise. The Standard is concerned with the recognition of revenue arising in the course of the ordinary activities of the enterprise from:

–the sale of goods,

–the rendering of services, and

–the use by others of enterprise resources yielding interest, royalties and dividends.

In the above case, the revenue shall be most accurately recognized when, the property in goods has been transferred to the buyer and it is not unreasonable to expect collection.