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unit-12-basic-concepts-relating-to-final-accounts

Unit-12 Basic Concepts Relating to Final Accounts

In this unit you will learn about the basic accounting concepts or principles which guide the preparation of final accounts.

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Name three items of revenues.


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Learning Pundits Content Team

Written on Jun 25, 2019 5:04:48 PM

Revenue is recognized in the period in which it is earned or realized. The revenue recognition is primarily based on realization principle which clearly states that in . identifying revenues with a specific period one must look to when the various transactions occurred rather than to the period in which cash inflow occurred. Thus,

i.In case of the sale of goods (or services) revenue is regarded as realized when sales actually take place and not when cash is received. In other words, credit sales are treated as revenue when sales are made and not when money is received from the debtors.

ii.Income such as rent, interest commission etc. are recognized on a time' basis.