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    Applicability: Business Organisation Types of Income

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    gaurav069
    This document discusses Accounting Standard 9 (AS-9) on revenue recognition in India. It states that AS-9 provides guidelines for properly recording income in accounting books and a uniform accounting system. However, AS-9 is not applicable to income from lease agreements, construction contracts, government grants, or insurance contracts, as separate accounting standards exist for these. The objective of AS-9 is to provide guidance on when to recognize revenue in the profit and loss statement. It discusses recognition of revenue from sale of goods and services, as well as other types of revenue like dividends, interest, and royalties.

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    Applicability: Business Organisation Types of Income

    Uploaded by

    gaurav069
    41 views3 pages
    This document discusses Accounting Standard 9 (AS-9) on revenue recognition in India. It states that AS-9 provides guidelines for properly recording income in accounting books and a uniform accounting system. However, AS-9 is not applicable to income from lease agreements, construction contracts, government grants, or insurance contracts, as separate accounting standards exist for these. The objective of AS-9 is to provide guidance on when to recognize revenue in the profit and loss statement. It discusses recognition of revenue from sale of goods and services, as well as other types of revenue like dividends, interest, and royalties.

    Original Description:

    Accounting standard 9 Revenue recognization

    Original Title

    AS 9

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    This document discusses Accounting Standard 9 (AS-9) on revenue recognition in India. It states that AS-9 provides guidelines for properly recording income in accounting books and a uniform accounting system. However, AS-9 is not applicable to income from lease agreements, construction contracts, government grants, or insurance contracts, as separate accounting standards exist for these. The objective of AS-9 is to provide guidance on when to recognize revenue in the profit and loss statement. It discusses recognition of revenue from sale of goods and services, as well as other types of revenue like dividends, interest, and royalties.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    41 views3 pages

    Applicability: Business Organisation Types of Income

    Uploaded by

    gaurav069
    This document discusses Accounting Standard 9 (AS-9) on revenue recognition in India. It states that AS-9 provides guidelines for properly recording income in accounting books and a uniform accounting system. However, AS-9 is not applicable to income from lease agreements, construction contracts, government grants, or insurance contracts, as separate accounting standards exist for these. The objective of AS-9 is to provide guidance on when to recognize revenue in the profit and loss statement. It discusses recognition of revenue from sale of goods and services, as well as other types of revenue like dividends, interest, and royalties.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    In the different business organisation there are different types of income/revenue are

    generated. All this income should be properly recorded in books of accounts of the business
    enterprise or organisation. For the purpose of proper treatment of recognition of income in
    books of account and uniformity accounting system ICAI (TheInstitute of Chartered
    Accountants of India) has issued Accounting Standard 9 which Revenue Recognition. All
    the business enterprise is required to follow thisaccounting standard for recognition of its
    income or revenue in books of accounts except following.


    Applicability

    This Accounting Standard is not applicable to following concern or situations. It is also
    important to know that whenever ICAI has issued separate Accounting Standardfor special
    transaction or organisation, common Accounting Standard will not be applicable.

    Income or revenue from hire purchase transaction & lease agreement (because there is
    separate AS-19 Accounting for Leases).

    Income or revenue from construction contract (because there is separate AS-7 Construction
    Contract).

    Income or revenue from Government grant and subsidies (because there is separate AS-12
    Accounting for Government Grants).

    Income or revenue of Insurance Company arising from insurance contract.

    Realised or unrealised profit on sale of fixed assets (because there is separate AS-10
    Accounting of Fixed Assets).


    Objective of AS-9

    This Accounting Standard explains how to recognise income or revenue in the profit & loss
    account. It also gives circumstances when recognition of revenue can be
    postponed. Revenue or income includes any cash or consideration received by the business
    enterprise in the normal course of its business operation and from the other source. It also
    can be said that it is chage made on customer/client for providing services or supplying
    goods. These ordinary activities of business includes followingrevenue of enterprise.

    Any revenue generated from sale of goods in which company is dealing.

    Any services provided or to be provided by enterprise and in respect of such service any
    income is arise.

    Income from use of resources of business that are dividend, interest, compensation &
    royalties.


    Revenue from sale of goods

    In the business enterprise when revenue of sale of good should be recognised it is depends
    up on satisfying following conditions. All these conditions must be satisfied to recognise
    income in books of accounts.

    Seller should have transferred the ownership of goods to purchaser for the consideration or all
    significant risk & rewards of ownership should have transferred to buyer.

    There should not be any kind of uncertainty for collection or receipt of cash, consideration or
    receivable etc.

    Seller does not retain any direct or effective control on such goods transferred.


    Revenue from providing services

    Generally revenue or income from the services is recognised on the bases of services
    actually rendered to receiver but the performance is measured by following two methods.


    Completed service contract method

    According to this method whole amount of revenue on service is recognised on completion
    of performance. It should be noted that full amount of revenue shall recognise only when
    performance is about to complete and on significant uncertainties about collection of
    amount of service charges.


    Proportionate completion method

    According to this method revenue is recognised on the completion of each work or act of
    services. As per this method proportionate revenue is recognised on the bases of
    total contract price, numbers of separate works or acts in such contract, time duration &
    cost required to be incurred in contract etc. Further it also should be considered that no
    significant uncertainty for collection or receipt of such amount of services.


    Other revenues of business enterprise


    Dividend income

    In the business organisation it is common act of all the enterprise to reinvest its income in
    beneficial investment plans, operations and in share of other companies. Any income arises
    on amount of such investment that is called divided. This dividend should be recognised in
    the year in which it is declared by the company irrespective of the fact that whether it is
    received in the same year itself or not.


    Interest income

    Company may purchase debentures of other company, give loan to outsider or employees
    or other parties. Any interest on such loan or debentures should be recognised in the year
    for which it relates that means interest on loan for the year of 2011-12 should be
    recognised in the year of 2011-12 itself only.


    Royalty

    Royalty should be recognised on the accrual bases according to the terms and conditions of
    agreement.

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