We recently actived revenue recognition and haven't closed an accounting period since going live. If understand correctly, revenue isn't recognized until the accounting period is closed. What happens to recognized revenue after reopening an accounting period?
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Revenue recognition rule models define how to recognize and distribute revenue over a recognition period term. Here are a few examples for the Billing-based Revenue Rule Models that can be used:
- Daily Recognition over time: Revenue is recognized evenly each day over the recognition term.
- Full recognition upon Invoicing: All recognition is recognized on the Invoice date.
- Monthly recognition over time: Revenue is recognized evenly into each month.
There are more Revenue Rule Models, as well as Custom Revenue Rule Models that can be created or selected to determine how the Revenue can be recognized. Please review the attached article on Manage Revenue Recognition Models.
With regards to the question about what happens to Recognized Revenue after re-opening an accounting period. Nothing happens unless you make changes that affect the Recognized revenue, then you would need to re-run the Trial Balance before re-closing the accounting period, so that it picks up and distributes the changes that were made.
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