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CMA Intermediate · Financial Accounting · Accounting Fundamentals

Vikram Industries follows the accrual basis. In March 2026 it sold goods worth Rs 5,00,000 on credit, delivered on 28 March 2026, and received Rs 1,50,000 in cash in April 2026. It also received Rs 60,000 as advance in March 2026 for goods to be delivered in May 2026. How much revenue from these transactions should be recognised for the year ended 31 March 2026?

Revenue recognised is Rs 5,00,000. Under the accrual basis, revenue arises when goods are delivered, not when cash is received, so the credit sale counts in full. The Rs 60,000 advance is undelivered and stays as a liability.

  1. ARs 5,00,000Correct
  2. BRs 5,60,000
  3. CRs 1,50,000
  4. DRs 2,10,000

Explanation

Revenue from the sale is recognised when goods are delivered (28 March), regardless of cash timing, so Rs 5,00,000. The advance of Rs 60,000 is a liability because goods are not delivered. Rs 5,60,000 wrongly adds the advance, and Rs 1,50,000 wrongly uses cash basis.

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