In case of gold, revenue is recognized in the accounting period in which the gold is

Question

Question

This question was previously asked in

UPSC EPFO 2016 General Ability Test Previous Year paper

Answer 1

The correct answer is option 3, i.e. mined.

Revenue is the monetary expression of the aggregate of products or services, transferred by an enterprise to its customers during a period of time.
In determining whether a particular revenue should be recognised at a particular point of time, regard must be made to:
- The amount involved should be capable of being measured objectively.
- It must earn revenue.
- The revenue must have been realised in the form of an asset or assets (usually cash or receivables) or by the extinction of a liability.
In case of gold mining revenue is recognised in the accounting period in which the gold is mined and not in the period in which it is sold.