New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Which of the following statements is

    FALSE?
    A As per AS-9, interest is recognised on time proportionate basis. Correct Answer Incorrect Answer
    B Revenue recognition is mainly concerned with the timing of recognition for revenues in the profit and loss account. Correct Answer Incorrect Answer
    C Economic concept of income is based on current values. Correct Answer Incorrect Answer
    D Revenue should be recognised only when cash is received as per AS-9 Correct Answer Incorrect Answer

    Solution

    This statement is incorrect because revenue recognition is not solely dependent on cash receipt. According to AS-9 (Accounting Standard 9) on Revenue Recognition, revenue should generally be recognized when certain criteria are met, regardless of whether cash has been received. These criteria include: The significant risks and rewards of ownership have been transferred to the buyer. The seller retains no effective control over the goods or services. The amount of revenue can be reliably measured. It is probable that economic benefits associated with the transaction will flow to the seller. The costs incurred or to be incurred in respect of the transaction can be reliably measured. In short, revenue recognition is based on the fulfillment of specific criteria, and cash receipt is not the sole determining factor.

    Practice Next