Introduction
This section explains what revenue recognition is, what it involves, and how you can implement it.
Revenue Recognition OverviewIntroduces revenue recognition.
QAD Revenue Recognition SolutionDescribes the concepts behind the revenue recognition solution.
Revenue Recognition Overview
Basic revenue recognition functionality decouples invoice generation in accounts receivable from recognition of sales revenue in the income statement. Decoupling is due to the timing of the passing of control for sale of a good or service. Basic requirements include:
• Delaying recognition of revenue until a certain number of days after invoicing or shipment.
• Recognizing revenue over a defined time period.
• Waiting for customer confirmation accepting delivery or installation of the good or service before recognizing revenue.
Advanced revenue recognition requires update of revenue based on other factors such as:
• Percentage complete of a project.
• Allocation of discounts equally across all items in a contract.
• Estimation of revenue until final contract price is agreed or known.
• Providing of detailed information to meet new disclosure requirements in the new accounting standards.