Question
As per AS 9 (Revenue Recognition), revenue from sales of goods should be recognized when:
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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