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Which is the correct answer?

<p>Advance payment from the customer is recorded as liability because its</p> <p>A . Going concern assumption</p> <p>B . Historical cost principle</p> <p>C . Revenue recognition principle</p>

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Question added by Altaf Bhoon ACA , Assistant Finance Manager , Atlantic Maritime Group FZE
Date Posted: 2014/11/23
Mohammed Ismael
by Mohammed Ismael , Finance Manager , confidintional

c

Asif Pyarali (CMA finalist)
by Asif Pyarali (CMA finalist) , Manager Finance and Export , Amlani Enterprises

C is the right answer, Revenue recognition principle tells us that Revenue is not recognized before it is earned, advances will be recoded as

Advance   Dr,

Unearned Revenue   Cr.

Wasif Ali
by Wasif Ali , Stock & Credit Controller , Petrogas Company Ltd.

Option C

the answer is

C . Revenue recognition principle

Roy Del Rio
by Roy Del Rio , Supervisor , JAMC Marketing Incorporated

Revenue recognition principle

Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Its option C

According to the IAS-18 Revenue recognition it says.

Sales can not be recognize until the criteria met.

Revenue from the sale of goods shall be recognized when all the following conditions have been satisfied:

1- the entity has transferred to the buyer the significant risks and rewards of ownership of the goods;

the entity retains neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold;

2- the amount of revenue can be measured reliably;

3-it is probable that the economic benefits associated with the transaction will flow to the entity; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

Since sales is not yet been recognized it surely must be a liability until its being recognized.

                                              Option C would be the right answer

Sabah Mursal
by Sabah Mursal , Senior Auditor , KPMG

Option C will be the answer. Advance payments will be liability as the services are yet to be provided.

Ahmed kandil
by Ahmed kandil , Cost Controller , Battour Holding Cpompany

correct answer is c 

Sayed Musharraf Hasan Qadri Tahir Hassan Syed
by Sayed Musharraf Hasan Qadri Tahir Hassan Syed , Group Financial Controller , Green Mart Trading Co. Jeddah

B is the relevant answer to describe the position in a Financial statements.

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