Multiple choice

'Advance received from customers is not taken as sale', is based on

  1. money measurement concept

  2. accrual consent

  3. consistency concept

  4. conservation
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the accrual basis of accounting, revenue is recognized only when it is earned, not when cash is received. An advance from customers represents a liability (unearned revenue) until the goods are delivered or services are provided, at which point the sale is recognized.

Keep practicing — related questions