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CMA Foundation · Fundamentals of Financial and Cost Accounting · Four Frameworks of Accounting and Forms of Organization

Kapoor Mills sold goods worth ₹80,000 on credit in March 2025, of which ₹50,000 was received in March and the balance in May 2025. Goods were delivered in March. Under the realisation concept with accrual accounting, how much revenue is recognised for the year ended 31 March 2025?

Revenue recognised is ₹80,000. Under the realisation and accrual concepts, revenue is recorded when goods are delivered and the customer becomes liable to pay, not when cash arrives. The unpaid ₹30,000 is simply shown as sundry debtors at year end.

  1. A₹30,000
  2. B₹50,000
  3. C₹1,30,000
  4. D₹80,000Correct

Explanation

Revenue is recognised when goods are delivered and the right to receive payment arises, not when cash is received. All goods were delivered in March, so the full ₹80,000 is revenue for the year. The ₹30,000 outstanding is shown as a debtor. Recognising only ₹50,000 reflects cash basis.

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