When to use it
- Tracing a recognized-revenue figure back to the exact billing event that produced it.
- Posting to or reconciling against your general ledger.
- Auditing a specific invoice, subscription, credit note, or dispute.
Who uses it
Accounting teams reconciling to the ledger, and anyone investigating a number.Main fields
How to read it
Each event produces one or more balanced entries. A daily subscription recognition, for example, moves an amount out of deferred revenue and into recognized revenue on a single day. A payment moves an amount from receivable to cash. Reading the account pair tells you what happened.Example
A few entries from a $50 monthly subscription billed in advance, then a payment.
The daily recognition lines repeat for each day of January, draining deferred revenue to zero by the 31st.
Relationship to other reports
- Summing the recognized-revenue lines for a period gives the Recognized Revenue report total.
- Deferred-revenue lines roll up into the Deferred Revenue report.
- All accounts roll up into the Statements.
Limitations to keep in mind
- Entries are pre-tax for revenue; tax sits in its own account.
- Closed periods are fixed; late events appear as adjustments in a later period.