How You Recognize Revenue on Transactions
Run the Recognize Revenue process to generate the revenue distribution records for invoices and credit memos that use invoicing and revenue scheduling rules.
Revenue scheduling rules determine the number of periods and the percentage of total revenue to record in each accounting period. Invoicing rules determine when to recognize the receivable for invoices that span more than one accounting period.
The Recognize Revenue process selects all transactions that have invoicing and revenue scheduling rules and that haven't yet been processed since the last submission of the process. This includes new transactions, unprocessed transactions, and partially processed transactions. The Recognize Revenue process creates the revenue distribution records for all accounting periods specified by the revenue scheduling rule on each transaction line.
Creation of Revenue Distributions
The Recognize Revenue process creates distribution records for invoices and credit memos both created manually and imported using AutoInvoice. The Recognize Revenue process uses the accounting distributions defined by AutoAccounting to determine the accounts for the revenue distribution records. If a transaction contains a deferred revenue scheduling rule, then the Recognize Revenue process instead creates the distribution records for the specified unearned revenue account. Deferred revenue is later recognized according to the contingencies associated with the particular transaction.
The Recognize Revenue process also creates the receivable, tax, freight, and AutoInvoice clearing account assignments which correspond to the accounting date of each transaction included in the process submission.
If you later decide that the revenue distributions need to be reclassified, you can update the individual revenue distribution on the transaction. Receivables automatically creates the necessary reverse accounting entries.
Each run of the Recognize Revenue process generates a Revenue Recognition Execution report. Use this report to review the details of revenue recognition on your transactions, as well as any records that failed processing.
Review of Unprocessed or Partially Processed Transactions
The Revenue Recognition Execution report contains a section called Unprocessed or Partially Processed Transactions, for transactions that failed processing for revenue recognition.
A transaction can fail revenue recognition processing either partially or completely:
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Partially Processed Transactions: If some but not all of the transaction lines are successfully processed, then the transaction appears as Partially Processed. For example, if processing succeeded for lines 1 and 2 of an invoice that has 3 invoice lines, the report displays one record for line number 3 with the accompanying line details.
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Unprocessed Transactions: If all of the transaction lines weren't processed, then the transaction appears as Unprocessed. For example, if processing failed for all 3 lines of an invoice, the report displays three record entries, one for each line, with the accompanying line details.
The main reason for failure to process revenue on a transaction or transaction line is data corruption on the transaction. Two examples of data corruption are:
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Incorrect accounting period on the transaction.
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Missing data needed to process revenue recognition on the transaction.
Review of Transactions with Invalid Accounts
The Revenue Recognition Execution report contains a section called Transactions with Invalid Accounts, for transactions that were successfully processed for revenue recognition but contained invalid revenue accounts.
This section lists all successfully processed transaction lines that have invalid revenue accounts.
An invalid revenue account doesn't prevent the processing of transactions and transaction lines for revenue recognition. If a transaction contained transaction lines that failed processing for revenue recognition, then the failed transaction lines appear instead in the Unprocessed or Partially Processed Transactions section. In this case, the same transaction number may appear on both sections of the report, if there were both transaction lines that failed processing and transaction lines that were processed successfully but with invalid revenue accounts.