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Overview
The Revenue Recognition Tab controls the initial settings of automated Revenue Recognition postings.
Key Concepts
| • | Revenue recognition is to used to meet the GAAP principle of recognizing revenue in the same accounting period that the expense was incurred. When this utility is run, labor and expense transactions are calculated based on user-set rules to obtain an earned revenue value on a project-by-project basis. The system then calculates the previous earned revenue. The difference is posted to Unbilled Revenue and offset to WIP. When automated invoicing is used, whatever gets posted to Billed Revenue is relieved from WIP and offset against Unbilled Revenue. |
| • | Rules can be established for each PM type (Labor, ODC, OCC, and ICC) on a project. Rules can analyze expense transactions at cost or marked up (billable value), and analyze labor at any of the three rates (pay, job cost, or bill). Values can then be compared to maximums of upsets to prevent over-valuing. The rules can also earn revenue based on user-entered percent completion. More on Revenue Recognition Project Setup |
| • | All billing statuses (except for Never Bill) are included. |
| • | When upsets occur, the overage is posted against an upset G/L account. This allows for a separation from the standard unbilled revenue account. You can make this the same as the standard. In other words, you could use one unbilled labor revenue account for both the labor revenue and the upset labor revenue. This technique is also useful regarding expenses. Expense revenue will post by expense code if available. In the case of a cap, you can post the overage to a separate account without randomly penalizing any expense code. |
Field Descriptions
Unbilled Revenue Base Codes
| • | Labor - Account for Labor Gross Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of Labor. |
| • | Other Direct Charges (ODC) - Account for ODC Gross Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of ODC. |
| • | Out-Of-Contract Consultants (OCC) - Account for OCC Gross Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of OCC. |
| • | In-Contract Consultants (ICC) - Account for ICC Gross Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of ICC. |
| • | Labor Upset - Account for Labor Overrun Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of Labor. When a cap is exceeded, this account will be debited for the amount of the overrun. |
| • | ODC Upset - Account for ODC Overrun Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of ODC. When a cap is exceeded, this account will be debited for the amount of the overrun. |
| • | OCC Upset - Account for OCC Overrun Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of OCC. When a cap is exceeded, this account will be debited for the amount of the overrun. |
| • | ICC Upset - Account for ICC Overrun Earned Revenue. Base account must have a metric type of unbilled revenue and a project management type of ICC. When a cap is exceeded, this account will be debited for the amount of the overrun. |
| • | Subcontractor - Account for Subcontractors. |
WIP Base Codes
| • | Labor - Base account for Labor work-in-progress. |
| • | Other Direct Charges (ODC) - Base account for ODC work-in-progress. |
| • | Out-Of-Contract Consultants (OCC) - Base account for OCC work-in-progress. |
| • | In-Contract Consultants (ICC) - Base account for ICC work-in-progress. |
Misc.
| • | Use Revenue Recognition - Indicates whether Revenue Recognition screens will be available in the system. |
| • | Post single journal entry per period - Flag indicating if only one entry should be used per period for Revenue Recognition postings. When checked, any previous entry in the same accounting period as the current processing period will first be deleted. |
Effort Calculation
| • | Include Never-Bill Transactions for Owning Profit Centers - Flag indicating if transactions with a never-bill status should be included in the calculation of effort in Revenue Recognition formulas for owning profit centers. |
| • | Include Never-Bill Transactions for Sharing Profit Centers - Flag indicating whether transactions with a never-bill status should be included in the calculation of effort in Revenue Recognitions formulas for owning profit centers. |
| • | Include Write-Off Transactions for Owning Profit Centers - Flag indicating if transactions with a write-off status should be included in the calculation of effort in Revenue Recognition formulas for owning profit centers. |
| • | Include Write-Off Transactions for Sharing Profit Centers - Flag indicating if transactions with a write-off status should be included in the calculation of effort in Revenue Recognition formulas for sharing profit centers. |
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