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Financial Accounting by P. C. Tulsian

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APPENDIX V

Recognition of Revenue and Expenses

Determination of income requires recognition of all revenues and all expenses for a particular accounting period. Now, the following questions arise—(a) What is meant by ‘Revenue’?, (b) When should the revenue be recognised?, (c) What is meant by ‘Expenses’?, (d) When should expenses be recognised? The following paragraphs answer each of these questions.

MEANING OF REVENUE

Revenue is the gross inflow of cash, receivables or other considerations arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends. Revenue is measured by the charges made ...

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