This document discusses accounting standard 9 regarding revenue recognition. It defines revenue as the gross inflow of cash or receivables from the sale of goods, rendering of services, or use of enterprise resources by others. Revenue is recognized when it is earned and realizable, following the revenue recognition and matching principles. The standard provides criteria for revenue recognition such as evidence of an arrangement, delivery, fixed pricing, and collectability. It also discusses types of revenue recognition for different transactions and the effect of uncertainties.

1. Presented by
Goutamabhat
ACCOUNTING STANDARD-9

2. REVENUE:
It is the gross inflow of cash, receivables or other consideration arising in the course of
ordinary activities of an enterprise from the
1. Sale of goods
2. Rendering of services
3. Use of enterprise resources by others, yielding interest, royalties and dividends
RECOGNITION:
Recording of the monetary effects of a business transaction into books of accounts
or financial statements
MEASURING OF REVENUE:
Charges made to clients or customers for goods supplied and services rendered
Charges and rewards arising from use of resources by others

3. Relationship between revenue recognition , the
matching concept and the accrual concept
The matching principle directs a company to report an expense in
the same period as the related revenues. It is associated with the
accrual method of accounting
The matching principle accrual cncept(revenues and expenses
are recorded as they are incurred, no matter when cash is
received)
With the revenue recognition principle(revenue should be
recognised when they are earned no matter when cash is
received

4. Principles
Revenue recognition principle provides that revenue is
recognized:
•When it is earned
•When it is realizes or realizable
•Earned –when earning proocess is substantially complete
•Realized-when goods and services are exchanged for cash
•Realizable-assets received are convertible into known amount
of cash
Primary criteria
•Persuasive evidence for an arrangement
•Delivery has occurred or services have been rendered
•The sellers price to the buyer is fixed or determinable
•Collectability is reasonabally assured

5. AS9 doesnot deals with revenue arising from
•Construction contracts(AS-7)
•Hire purchase, lease agreements(AS-9)
•Governament grants and other similar subsidiaries(AS-12)
•Revenue of insurance companies arising from insurance
contracts
Revenue recognition is mainly concerned with timing of
recognition of revenue in statement of p&l.
Revenue recognition types-no significant uncertainity
exists
1)Sales-date of transfer of ownership
2)Services-performed and billed
*complete service contract method
*proportionate complete method
3)Use of enterprises by others-Accrual basis

6. 1)Completed contract method
Recognizes all income when project is
completed
Applicable where service can be completed in
single act
Where extent of progress cannt be measured
2)Proportionate completion method
Where many acts of service to be completed
Eg.actual job
Total job
Revenue recognition-services

7. Effect of uncertainities on revenue recognition
•Revenue recognition requires that revenue is
measurable and expects ultimate collection
•If it is not possible to determine the consideration
within reasonable limits, the recognition of revenue is
postponed
•When such postpone takes place, it is considered
asrevenue of the period in which it is properly
recognised
•Uncertainity relating to collectability arises subsequent
to time of sale or providing service, separate provisions
should be made to reflect the uncertainity

8. Sale of goods -conditions Realized
On approval basis After formal approval by
customers
consignment After goods sold to third party
Cash on delivery sales After cash received
Installment payments,delivery of
goods after final payment
Untill goods are delivered
Sale and repurchase agreements Not recognised as revenue
Rendering of services Realized
Installation fees After installment and
acceptence by customers
Insurance agency Commencement of related
paties
Admisson fees Event take place
ILLUSTRATIONS

9. conclusion:
Revenue recognition principle is a cornestore of accrual
accounting together with the matching principle. They both
determine the accounting period, in which revenues and
expenses are recognized, in contrast to cash accounting
where revenues are recognized when cash is received no
matter when goods are sold or services are rendered
References:
•www.icai.org
•www.mca.gov.in
•www.quora.com