1. A new business provided consultancy worth Rs. 50 Lakhs but did not receive a single rupee out of it in the first year. The entire amount is still receivable from customers, although services have already been provided. Their accountant showed entire Rs. 50 Lakhs as income of first year only. The owners are shocked, since they will have to pay income tax on the profit whereas in reality they have not received any amount. Which accounting concept has been followed? When should it be shown as income, in first year or in second year?
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