Commerce Exam > Commerce Questions > Mohan the owner of a business receives an ord...
Start Learning for Free
Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so?
Most Upvoted Answer
Mohan the owner of a business receives an order for the supply of good...
Can Mohan Record the Order as a Sale?
- Understanding the Concept of Sale: In commerce, a sale occurs when goods or services are exchanged for money or other consideration. The transaction is complete only when the payment is received in full.
- The Order vs. the Payment: In this case, Mohan has received an order for the supply of goods worth RS 2,00,000 but has only received RS 25,000 against the order. This means that the transaction is not complete, and Mohan cannot record it as a sale until he receives the full payment.
- Accrual Accounting: In accrual accounting, revenue is recognized when it is earned, regardless of when the payment is received. However, in this case, the revenue cannot be recognized until the payment is received in full.
- Matching Principle: The matching principle states that expenses should be recognized in the same period as the revenue they help generate. If Mohan records the order as a sale, he will have to recognize the cost of goods sold (COGS) as an expense even though he has not received the full payment. This would violate the matching principle.
- Conclusion: Based on the above analysis, Mohan cannot record the order as a sale until he receives the full payment.
Community Answer
Mohan the owner of a business receives an order for the supply of good...
Yes, I think it is correct because Mohan had received order means he will be selling the goods on credit so it will be written in sales book.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Similar Commerce Doubts
Top Courses for CommerceView all
Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so?
Question Description
Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so?.
Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so?.
Solutions for Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? defined & explained in the simplest way possible. Besides giving the explanation of
Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so?, a detailed solution for Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? has been provided alongside types of Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? theory, EduRev gives you an
ample number of questions to practice Mohan the owner of a business receives an order for the supply of good worth RS 2,00,000. He has also received RS 25,000 against this order. Mohan wants to record it as a sale. Is Mohan correct in doing so? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup