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Case Code: CLFIN013
Case Length: 4 pages
Period: -
Pub Date: 2020
Teaching Note:Available
Subject : Finance
Organization :Anirudh Furniture Spare Parts Limited
Industry : Home Appliances & Consumer Products
Countries : India

Revenue Recognition – What Went Wrong?



Ramesh Kumar (Ramesh), accountant at Anirudh Furniture Spare Parts Limited (AFSPL), went on leave for 2 months (April and May) for personal reasons. Before going on leave, he assigned the task of revenue recognition for the two months to Avinash Kumar, his assistant. After returning, Ramesh found that the revenue recognition statement submitted by Avinash had not followed the actual guidelines that Ramesh followed. Hence, he started to reconcile the revenue figures by validating the record books and cross verifying with buyers. The present case study is helpful in discussing the concept of revenue recognition and the guidelines specified under Accounting Standard-9 - Revenue Recognition from the sale of goods.
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  • The concept of revenue recognition in accounting.
  • The importance of revenue recognition in decision making.
  • The guidelines specified in Accounting Standard-9 (Revenue Recognition) in recognizing revenue from the sale of goods.
Ramesh Kumar (Ramesh) worked as an accountant at Anirudh Furniture Spare Parts Limited (AFSPL), a furniture spare parts manufacturing unit. At AFSPL, revenue was recognized after buyers received the furniture and confirmed that they were happy with the quality and delivery of the furniture. Ramesh, who had been working with AFSPL for a long time, followed this process.

Normally, it took one month for the buyers to get back to Ramesh to confirm the sale and payment of money. It was after this that revenue was recognized. ...


Accounting; Accounting principles; Accounting Concepts; Revenue Recognition; Accounting Standard-9; Terms of Revenue Recognition; Profit and loss account; balance sheet

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