Question

Ratan sold goods to Tanu on 22nd February2021 and got its payment on may 2021.Recognition of revenue of this transaction is________

Answer 1

Answer:

24 is the correct answer

Answer 2

It will be recognized on accrual basis

Explanation:

• According to Accrual Accounting Assumption , the transactions are recorded as and when they occur irrespective of the fact that whether actual payment has been made or received.

• So, the above said transaction shall be recognized on 22nd February in the Book of A/c's of Tanu as follows:

           Tanu's  a/c        Dr.                              

           To Sale   a/c                                                        

         ( For Goods  sold to Tanu)

• And in May 2021 when the payment has been received, the following journal entry will be passed as:

            Cash/Bank  A/c         Dr.                    

            To Tanu's  A/c                                                      

          (Being payment received from Tanu)