Basic Accounting Entries in Revenue Management

This topic describes the sequence of accounting events that can occur, depending on whether the first action is fulfillment or invoicing.

This table shows the sequence of accounting events when the first action performed on a performance obligation is fulfillment:

Accounting Event Sequence Beginning with Fulfillment

Event	Description	Debit	Credit
Initial performance event	Accounting for the initial performance event.	Contract Asset account	Contract Liability account
Fulfillment	Recognize revenue.	Contract Liability account	Contract Revenue account
Invoicing	Accounting for billing and the allocation discount when the allocated amount is more than the invoice amount.	Contract Clearing account Contract Discount account	Contract Asset account
Invoicing	Accounting for billing and the allocation discount when the allocated amount is less than the invoice amount.	Contract Clearing account	Contract Asset account Contract Discount account

This table shows the sequence of accounting events when the first action performed on a performance obligation is invoicing:

Accounting Event Sequence Beginning with Invoicing

Event	Description	Debit	Credit
Invoicing	Accounting for the initial performance event.	Contract Asset account	Contract Liability account
Invoicing	Accounting for billing and the allocation discount when the allocated amount is more than the invoice amount.	Contract Clearing account Contract Discount account	Contract Asset account
Invoicing	Accounting for billing and the allocation discount when the allocated amount is less than the invoice amount.	Contract Clearing account	Contract Asset account Contract Discount account
Fulfillment	Accounting to recognize revenue.	Contract Liability account	Contract Revenue account