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The Realisation Concept states revenue should be recorded when:
AThe customer expresses interest
BIt is realised — cash received OR legal right to receive cash has been created
COrder is placed by the customer
DGoods are dispatched to warehouse
Answer & Solution
Correct answer: B. It is realised — cash received OR legal right to receive cash has been created
1. Per OCR: "revenue from any business transaction should be included in the accounting records only when it is realised. The term realisation means creation of legal right to receive money."
2. Selling goods = realisation. Receiving order = not yet.
3. Distinguishes revenue from mere customer intent.
_Source: ICMAI BoS CMA Foundation Paper 2 (FFCA) — Paper2_07042026.pdf, Module 1 §1.2.2.1 (page 18)_
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