Fundamental Glossary / Earnings & Accounting Concepts
Revenue Recognition
The rules for when a sale is recorded as revenue.
Formula
Under Ind AS 115, revenue is recognised when a performance obligation is satisfied, for the amount the company expects to collect.
What it means
Cash received is not the test. A subscription collected today is deferred revenue until the service is delivered. A credit sale delivered today is revenue today, even though cash arrives later.
The policy note says whether revenue is recognised at a point in time or over time, and whether the company reports gross or net.
How to read it
A change in policy that pulls revenue forward will boost one year and steal from the next. Compare the policy paragraph year to year.
What to watch
Bill-and-hold arrangements, side letters, and rights of return are the classic ways recognition gets ahead of a real sale. Receivable days are the symptom to watch.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.