if a firm taken into acccount advance received from a customer as income it violates which of the income concept?
Answers
Answer:
Matching of income and expense. Taking the advance into a trust account and drawing on the deposit as expenses are incurred keeps the picture correct. Money deposited in a trust account is not taxable income until it is withdrawn for deposited in the regular business account. This is generally directed at Cash basis accounting as opposed to Accrual accounting.
Answer:
Accrual concept
Explanation:
In the given case, where a firm considers an advance amount from a customer as its income is a voilation of accural concept.
Accrual concept is the basic and elementary principle of accounting. In this principle, only those revenues can be taken as income which have been actually earned and not something which has been taken as loan, advance amount or cash