Question

‘Akash’ places an order on 1.1.2005 with Bino for the supply of machinery for Rs. 5,00,000/-. On receipt of the order, Bino purchases raw materials employs workers, produces machinery and delivers it to Akash on 1.2.2005. Akash makes the payment on 10.02.2005. On which date, the revenue is recognized? Substantiate your answer by quoting the relevant accounting concept. ‘Revenue Recognition Concept’.

Answer 1

Revenue is recognized on 1.2.2005, i.e. when the title of goods passes from the seller to the buyer.