In accordance with the conceptual framework, income is recognised in the statement of profit or loss and other comprehensive income when:
A) an decrease in future economic benefits relating to an decrease in an asset or an increase in a liability can be measured reliably.
B) an increase in future economic benefits relating to an increase in an asset or a decrease in a liability can be measured reliably.
C) an increase in future economic benefits relating to an increase in an asset can be measured reliably.
D) an increase in future economic benefits relating to an decrease in an asset or an increase in a liability can be measured reliably.

Question

Quizplus · Accepted Answer

Income is recognised when there is an increase in economic benefits related to an increase in asset or a decrease in liability, which can be measured reliably. This is in line with the accrual accounting principle of recognising income when it is earned, rather than when the cash is received. Options A and D refer to a decrease in economic benefits, which would result in a loss, not income. Option C refers only to an increase in asset without a corresponding increase in economic benefits, which would not necessarily result in income.

In Accordance with the Conceptual Framework, Income Is Recognised in the Statement