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    Question

    As per AS 9 (Revenue Recognition), revenue from sales of

    goods should be recognized when:
    A The purchase order is received Correct Answer Incorrect Answer
    B The goods are manufactured Correct Answer Incorrect Answer
    C The significant risks and rewards of ownership are transferred to the buyer Correct Answer Incorrect Answer
    D The invoice is raised Correct Answer Incorrect Answer
    E The payment is received Correct Answer Incorrect Answer

    Solution

    Accounting Standard (AS) 9, 'Revenue Recognition', specifies the conditions for recognizing revenue from the sale of goods. The central criterion is the transfer of significant risks and rewards of ownership. This generally occurs when the goods are delivered to the buyer, as delivery typically transfers the risk of damage or loss. A purchase order (A) is just an intention to buy, manufacturing (B) is a production step, raising an invoice (D) is a billing event, and receiving payment (E) is related to cash flow, not revenue recognition.

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