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WAEC Financial Accounting 2006 Question 27

Question 27

Accounting Concepts and Conventions

Revenue is recognised in the profit and loss account as soon as a

  1. A.debtor pays what is due from him
  2. B.sale of goods takes place and money is received
  3. C.sale of goods takes place whether or not money is received
  4. D.sale of a fixed asset takes place
Show the answer and explanation

Answer: C (sale of goods takes place whether or not money is received)

Explanation

Under realisation, revenue is recognised when the sale is made, paid or not.