Understanding the Contract Liability Accounting Process

You can create and send invoices for products or services that you will deliver in the future or over a range of time. Use contract liability accounting to generate accounting entries that defer revenue recognition based on a revenue recognition date and proration method that you select.

The supported revenue recognition basis includes contract date, order date, ship date, and a range of dates (from/to or start/end). When you use a date range as the revenue recognition basis, you can select different methods of proration.

This section discusses:

• Accounting entries with contract liability.

• Contract liability proration methods.