Revenue Recognition

The accounting rules for when revenue can be recorded on financial statements.

Finance & Billing

Ufafanuzi wa

Revenue recognition is the accounting principle determining when revenue from a customer contract can be recognized. For subscription businesses, revenue is typically recognized ratably over the service period, not at invoicing. ASC 606 and IFRS 15 standardize revenue recognition across reporting regimes.

Pointi muhimu

  • Subscription revenue typically recognized ratably over contract period
  • Deferred revenue = contract billed but not yet recognized
  • Services and one-time fees recognized per-delivery
  • ASC 606 (US GAAP) and IFRS 15 are current standards
Mfano wa Mfano

Customer signs $12k annual contract, pays upfront. At signing: $12k deferred revenue booked. Each month: $1k recognized as revenue, $1k removed from deferred.

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