International Accounting Standard 18: Revenue caters the accounting requirements for a very important aspect – Revenue. To measure the financial performance of entity the cash generated through sale of goods or services. However, situations can be quite confusing and complex in many instances. This standard provide guidance on how to deal with such situations and correctly report and present the information in the financial statements.
IAS 18 separates the cash inflows from other activities and from the sale of goods and services which is the real business of the entity which is in real termed as revenue. However, the incomes are just not only the revenue therefore IAS 18 details the conditions that needs to be fulfilled in order to recognize, measure and present revenue on sale of goods, rendering services. Services are mostly recognized on the basis of stage of completing and determining the stage of completion is explained in IAs 18.