Set up revenue recognition and deferrals

Spread income and costs over the periods they belong to: recognition schedules release deferred revenue to income, and deferral schedules amortise a prepayment or accrual.

Before you start

• Pick the company you are working in and the Scope level for each schedule.
• Have the GL accounts ready — the amount per period is derived for you (total divided by the periods, with the last period absorbing the rounding).
• Decide the method: straight line spreads evenly, milestone recognises discrete amounts on demand, and point-in-time releases the whole amount on a date.

[screenshot: Revenue Recognition workspace showing the schedule list and form]

Steps

Create a recognition schedule

1. Open Accounting → Revenue Recognition and add a schedule.
2. Choose the Recognition method (required) — Straight line, Milestone or Point in time.
3. Enter the Description (required) and the Total amount (required, greater than zero); currency is optional.
4. Set the Start date (required).
5. Choose the Revenue account (required) — it must differ from the deferred account. The Deferred revenue account is optional and defaults to the deferred-revenue role account.
6. For straight line, set Periods (months) (required for this method, 1–600). For milestone, add milestones — each with an optional label and a required amount and due date.
7. Save the schedule.

[screenshot: Recognition schedule form with method, accounts and periods]

Edit and run

1. Editing is a partial update — you may change just the description, or the full basis when nothing has been recognised. When part-recognised, the service limits you to the description and the future (unposted) entries.
2. Use Recognise due now to release straight-line and point-in-time periods that have fallen due; mark a milestone entry done to recognise it.

Create a deferral schedule

1. From the deferrals area, add a schedule and choose the Deferral type (required) — Prepayment or Accrual.
2. Enter the Description and Total amount (both required), set the Balance account and the Expense account (both required, and different), the Start date and the Periods (months) (1–600).
3. Save, then use Post due now to post each period’s journal as it falls due.

Result

Deferred revenue is released to income on schedule and prepayments or accruals amortise over their term, each posting its periodic journal automatically.

Related

• Accounting reference
• Run period and year-end close
• Manage fixed assets and depreciation