Accounting Distributions When PeopleSoft Contracts Manages Revenue

Use PeopleSoft Contracts to manage revenue when you want to book revenue on a different schedule (or under different rules) than when you bill for that contract line. The flow of accounting entries for fixed-amount contract lines depends upon whether you select to book contract revenue to contract liability.

Accounting Distributions for Fixed-Amount Contract Lines with Contract Liability Entries

After a contract has been activated, the Contract Liability process creates the following accounting entry for each active fixed-amount and percent-based contract line:

Account	Debit	Credit
Contract Asset Account	100
Contract Liability Account		100

Note:

The Contract Liability process picks up all active fixed-amount contract lines with contract liability enabled on an active contract, regardless of whether you have associated these contract lines with a revenue plan. The revenue amount on the contract line is used for this accounting entry.

Once the contract line is assigned to a revenue plan and the plan contains a ready event, the Amount-based Revenue process creates the following accounting entry, moving the USD 100 from deferred to real revenue:

Account	Debit	Credit
Contract Liability Account	100
Revenue Account		100

Once the contract line is assigned to a billing plan and the plan contains a ready event (in the case of milestone and percent complete plans), the CA_BI_INTFC process sends the contract asset accounting distribution associated with the contract line to PeopleSoft Billing. PeopleSoft Billing creates the following accounting entry, moving the USD 100 from Contract Asset to Billed AR:

Account	Debit	Credit
AR Account	100
Contract Asset Account		100

The final step in the process is to collect cash for your outstanding invoices. Once cash is received, the following entry is made in PeopleSoft Receivables, moving the USD 100 from Billed AR to Cash:

Account	Debit	Credit
Cash Account	100
AR Account		100

Accounting Distributions for Rate-based Contract Lines and Fixed-Amount Contract Lines with No Contract Liability Entries

Once an active contract line on an active contract is assigned to a revenue plan and the plan contains a ready event (optional in the case of as-incurred plans), the amount-based or rate-based revenue process creates the following accounting entry:

Account	Debit	Credit
Contract Asset Account	100
Revenue Account		100

Once the contract line is assigned to a billing plan and the plan contains a ready event (optional in the case of as-incurred plans), the CA_BI_INTFC process sends the contract asset accounting distribution associated with the contract line to PeopleSoft Billing. PeopleSoft Billing creates the following accounting entry, moving the USD 100 from Contract Asset to Billed AR:

Account	Debit	Credit
AR Account	100
Contract Asset Account		100

The final step in the process is to collect cash for outstanding invoices. Once cash is received, the following entry is made in PeopleSoft Receivables, moving the USD 100 from Billed AR to Cash:

Account	Debit	Credit
Cash Account	100
AR Account		100