Q.A trader received an order for goods worth ₹40,000 on 25th March, delivered the goods and raised the invoice on 28th March, and actually received the payment on 10th April. In which year should the ₹40,000 be recognised as revenue under

The two bases of accounting disagree about when revenue is recognised, and this question is a direct test of that difference using dates that straddle the year-end. …

The order date (25th March) is not relevant to either basis — an order alone creates no accounting transaction, since no goods or service has yet changed hands.

1. Cash Basis: Revenue is recognised only when cash is actually received. Since payment came in on 10th April, which falls in the next accounting year (the year beginning 1st April), the ₹40,000 is recorded as revenue of the next year, not the year ending 31st March.
2. Accrual Basis: Revenue is recognised when it is earned — that is, when the goods are delivered and the business becomes legally entitled to payment (evidenced by the invoice). That happened on 28th March, which falls within the year ending 31st March. So the ₹40,000 is recorded as revenue of the current year, regardless of when the cash is actually collected. …

Identify the event that satisfies each basis's recognition rule (cash received vs revenue earned), then place that event on the timeline relative to the y …

Recognising the revenue on the order date instead of the delivery/invoice date under Accrual Basis — an order is not yet a transaction; also assuming both bases must give the same answer, when the whole po …