CSEET · Fundamentals of Accounting · Basic Concepts and Principles of Accounting
Sharma Traders, which follows the accrual basis, sold goods worth Rs 80,000 on credit in March 2026 and received the cash in April 2026. In which period's financial statements is the Rs 80,000 sale reported?
The sale is reported in March 2026. Under the accrual basis, effects of transactions are recognised when they occur and reported in the period to which they relate, regardless of when cash is received. Recording it in April would follow the cash basis.
- AApril 2026, when cash is received
- BMarch 2026, the period in which the sale occurredCorrect
- CBoth March and April 2026, in equal halves
- DNeither period, until the debtor is written off
Explanation
Accrual accounting records transactions in the periods to which they relate, not when cash is received. The sale occurred in March 2026, so the whole Rs 80,000 is reported then. April would be correct only under the cash basis.
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