Recording Revenue in the Period It Is Earned
Proper revenue recognition is so important that the Financial Accounting Standards Board (FASB), the industry’s regulatory body, passed a new standard for deferred revenue. The new standard states that revenue is recognized when control of the goods or services transfers to the customer. For example, if your business engages in any the following activities, you should comply with this new standard:
- Annual Contracts
- Bundles Goods and Services
- Customer Acquisition (e.g. Sales Commissions)
- Future Events (i.e. Shows, Conferences, Rally’s, etc.)
- Products with Future Release Schedules
- Sales with Future Deliveries
- Software as a Service (SaaS) – Software Licenses
- Training Classes Delivered in Future Periods
Gravity Software™ (Gravity) simplifies this process with its Revenue Recognition (Rev Rec) module. This module enables companies to appropriately recognize revenue and expenses in the period they are earned. Based on Gravity’s recognition templates, Gravity will create the deferral schedules automatically. All you have to do is post the monthly entries.
Gravity provides a strong financial system for growing businesses. Gravity’s Rev Rec provides reliable and accurate financial statements that truly represent revenue and the associated costs that have been earned by companies. Gravity helps companies grow by unlocking information and reducing friction. And with real-time insights into all your lines of business, leads to better decisions made by management, investors and others.
If your business is outgrowing your current entry level accounting software, consider Gravity Software. The technology just works!