Question

Advance received from customer is not
taken as sale, based on
Select one:
a. Consistency concept
b. Money measurement concept
c. Realisation concept
d. Conservatism
12​

Answer 1

Answer:

Advance recieved from a customer is not taken as income or Sales. ... This is based on revenue recognition principle and do cover prudence concept and so the same is not recorded as sales or Income.

Answer 2

Advance received from customer is not taken as sale, based on the Realisation concept.

• c. Realisation concept is the correct option.

• The Realisation Concept is the principle in which revenue can only be recognized once the basic goods or services which is attributed to the revenue have been delivered or provided, respectively. Thus, revenue can only be recognized after it has been acquired. Hence, the Advance received from the customer is not
• taken as a sale.

• The realisation concept is also known as the Revenue recognition concept which assumes that the revenue is recognized solely when there is a sale or transfer of goods. Receiving an advance is not a sale transaction, thus revenue is not recognized.

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