Financial Accounting for Managers, 2/e, 2nd Edition

6

Accounting for Revenue and Account Receivables

CHAPTER OBJECTIVES

This chapter will help the readers to:

• Differentiate between operating income and other income.
• Understand the application of accrual principle on revenue recognition.
• Appreciate the issues involved in revenue recognition from sales of goods, provisions of services and also long-term contracts.
• Analyse the impact of uncertainty on revenue recognition.
• Develop an understanding of accounting for revenue and receivables.
• Get familiarity with the key requirement of AS 9 ‘Revenue Recognition’, AS 7 ‘Construction Contracts’, and AS 11 ‘The effect of changes in Foreign Exchange Rates’.

6.1  REVENUE

The expression ‘revenue’ means the consideration earned by an enterprise by sale ...