A: Revenue is recognized when the significant risks and rewards of ownership are transferred. R: This is based on the Realization Concept. Choose the correct option. MCQ with Answer and Explanation
A: Revenue is recognized when the significant risks and rewards of ownership are transferred. R: This is based on the Realization Concept. Choose the correct option.
A. A is true but R is false
B. A is false but R is true
C. Both A and R are true and R is the correct explanation of A
D. Both A and R are true but R is NOT the correct explanation of A
Answer: Option C
Solution (By JKSSB Mock Tests)
The Realization Concept dictates that revenue is recognized when the legal right to receive payment is established, typically upon transfer of risks and rewards. R correctly identifies the concept.
Explanation:
Credit purchases of assets (like machinery) do not go into the Purchases Book (which is only for trading goods) or Cash Book (as it's a credit transaction). They are recorded in the Journal Proper.
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