Set up a revenue recognition schedule
by Intuit•36• Updated about 2 hours ago
Learn how to set up an automatic schedule to help with revenue recognition in QuickBooks Online Advanced.
Revenue Recognition is a generally accepted accounting principle (GAAP) that defines how and when you recognize revenue. It lets you record a payment for a product or service you’ll deliver in the future and recognize the revenue over time. Get more info about the ASC 606 GAAP principle.
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Why Revenue Recognition is important
The revenue recognition standard ASC 606 affects all entities—public, private, and not-for-profit regardless of industry. It helps businesses of all sizes recognize revenue consistently over time.
Here are some business models that may use revenue recognition.
Business Model | Product or Service example |
Subscription based | A wine club charges a membership fee on top of subscription fees and wants to recognize the membership revenue upfront but defers wine subscription revenue until they can deliver to the customer. |
Project based / contractors | A project-based business or a contractor, who charges their customers upfront, wants to recognize some of the revenue only when that part of the job is complete. |
Software | A hosted software company that charges US $240 yearly and recognizes US $20 every month until the software agreement ends. |
E-commerce | E-commerce businesses receive payment upfront but recognize the revenue upon delivery. |
Pre-paid Billing | An insurance company charges an annual premium at a discount, but the revenue is recognized monthly. |
Consulting Services / Law Firms | A law firm charges its client a retainer fee before rendering services and wants to recognize the revenue only when the work is complete. |
Find out about cash and accrual accounting methods in QuickBooks Online.
Run the Revenue Recognition report
You can see the billed and recognized amounts in the Deferred Recognition Detail for each column.
- Go to Reports (Take me there).
- In the search bar, search for and open Revenue Recognition Report.
Customize or filter the report as you see fit.
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