Contract
For revenue accounting, a contract is an agreement between parties that creates enforceable rights and obligations. It may be written, oral or implied by customary practice. IFRS 15 requires specified conditions, including approval, identifiable rights and payment terms, commercial substance and probable collection, before applying its customer-contract revenue model. The accounting follows the promised goods or services and their transfer.
Worked example
An accepted order for a specified service at an agreed fee can form a customer contract even without a lengthy signed document.
Common mistake
An order or cash deposit alone does not establish that revenue has already been earned: performance obligations still matter.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |