## Definition of Revenue under AS 9

Revenue is the gross inflow of cash, receivables, or other consideration arising from ordinary course of business activities.

### Important: Gross vs. Net

Revenue is always measured gross (before deducting costs)
Amounts collected on behalf of third parties (e.g., GST/taxes collected for the government) are not revenue — they are liabilities

### Measurement of Revenue

Revenue should be measured at the fair value of consideration received or receivable.

Worked example

### Example 1

A retailer sells goods for ₹10,000 + GST ₹1,800. The revenue recognised is ₹10,000. The GST of ₹1,800 is a liability payable to the government and does not form part of revenue.

### Example 2

A company sells goods on credit for ₹50,000. Revenue = ₹50,000 (gross inflow of receivable, not cash).

⚠️ Common exam mistakes

Including taxes (GST, VAT) collected from customers in revenue — these must be excluded as they are collected on behalf of the government.
Recognising revenue net of agent commission when the entity is acting as principal — principals must recognise gross revenue.

Bare-Act text Para 4.1 – Definition · AS 9 – Revenue Recognition (ICAI) · click to expand

Revenue is the gross inflow of cash, receivables or other consideration arising in the course of the ordinary activities of an enterprise from the sale of goods, from the rendering of services, and from the use by others of enterprise resources yielding interest, royalties and dividends.

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AS 9 – Definition of Revenue

Worked example

⚠️ Common exam mistakes