Abstract

Devi, a young and enthusiastic fashion designer, started a boutique called Devi Fashions (DF) after graduating with a degree in fashion designing. Within a short span of time, DF became hugely popular among urban college students, working women, and premium segment customers, for its unique, customized, and fashionable contemporary as well as traditional wear. Overwhelmed by the success of the business, Devi wanted to launch new models during the third quarter of the financial year 2019-20, based on the expected revenues for the quarter. However, she was in a dilemma about estimating the actual revenues. The present case study can be used to discuss the criteria of uncertainty in revenue recognition process, and how it impacts revenue generation in accounting. The Accounting Standard-9 (Revenue Recognition) provides guidelines for the recognition of revenue when there is uncertainty in the revenue recognition process.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The effect of uncertainty on the revenue recognition process
• The treatment of revenue prior to the actual sale proceedings
• The treatment of revenue after the actual sale proceedings

Keywords

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