1. Accounting
  2. Revenue and Expense Recognition
  3. Advanced Revenue Management (Essentials) and (Revenue Allocation)
  4. Month-End Revenue Processing
  5. Reclassification of Deferred Revenue
  6. Creating Reclassification Journal Entries

Creating Reclassification Journal Entries

Run reclassification after you create revenue recognition journal entries. If you run reclassification first by mistake, you can go back and rerun the revenue recognition journal entry process. Then rerun the reclassification journal entry process.

For information about creating revenue recognition journal entries, see Scheduling Revenue Recognition Journal Entries and Generating Advanced Revenue Recognition Journal Entries.

Reclassification is cumulative, but the process runs only for arrangements that are marked as eligible in the selected posting period. A revenue arrangement must be compliant to be eligible for reclassification. Only approved invoices and credit memos are considered for processing. Arrangements are eligible for reclassification in the period that the following transactions are created or resaved:

You must create reclassification journal entries each month to ensure accurate results in subsequent periods. Revenue arrangements are included in the reclassification process only if they are approved and the Compliant flag is checked.

Only approved invoices and credit memos are processed for reclassification. Unapproved billed amounts are excluded from calculations. When you create reclassification journal entries, you will receive a warning if the current or prior periods have unapproved invoices or credit memos. Any unapproved invoices and credit memos are ignored for purposes of reclassification.

Note:

If the accounting preference Require Approvals on Journal Entries is checked, ensure that all journal entries related to revenue recognition are approved prior to reclassification. If revenue recognition and prior period reclassification journal entries are not approved in advance, the reclassification adjustments will be incorrect.

To create reclassification journal entries:

  1. Revenue managers and accountants, go to Revenue > Revenue Recognition Journal Entries > Schedule Reclassification Journal Entries > Run Now.

    Administrators, go to Transactions > Financial > Schedule Reclassification Journal Entries > Run Now.

  2. Select the Posting Period for which you are reclassifying revenue.

    You cannot post reclassification journal entries in closed periods. If the period is closed for accounts receivable, the journal entries are posted in the next open period.

    You can post reclassification journal entries in periods that are locked for accounts receivable as part of the Period Close Checklist.

    The Journal Entry Date automatically sets the transactions date to the of the selected Posting Period. You can edit the date if needed.

  3. Use the other filters at the top of the page to limit the number of reclassification journal entries created at one time.

    The Number of Transactions field displays the number of transactions that meet your criteria and are eligible for reclassification. If you have eligible transactions from the classic Revenue Commitment feature, these transactions are included in the count.

    • Subsidiary – Select a Subsidiary. This required filter appears only on NetSuite OneWorld implementations.

    • Accounting Book – Select an Accounting Book. This required filter appears only when the Multi-Book Accounting feature is enabled.

    • Revenue Recognition Source – This filter appears when the Revenue Recognition and Advanced Revenue Management (Essentials) features are both enabled.

      • - All – – Select this option to list all revenue recognition schedules and revenue recognition plans that meet the criteria.

      • Revenue Recognition Schedules – Select this option to list only revenue recognition schedules that meet the criteria in the Revenue Recognition Schedules subtab. The Revenue Recognition Plans subtab is empty.

      • Revenue Recognition Plans – Select this option to include only revenue recognition plans that meet the criteria in the Revenue Recognition Plans subtab. The Revenue Recognition Schedules subtab is empty.

    • Transaction Type – Select a transaction type to filter the list, or select – All – to include all transaction types. For Advanced Revenue Management, the Transaction Type is always Revenue Arrangement.

    • Customer – Select a customer to filter the list. When the Projects feature is enabled, this filter is called Customer:Project.

  4. Click Create Journal Entries.

    The Processed Reclassification Journal Entries page opens. At each step in the reclassification process, revenue arrangements that fail a step are isolated from further processing. Processing continues for the remaining revenue arrangements through journal entry creation.

  5. Click Refresh to update the status.

  6. When the Submission Status is Complete:

    • Click the link in the Message column to open the Bulk Processing Errors: Results page and view any errors.

      Revenue arrangements with errors are listed. These revenue arrangements are available for resubmission.

    • Click Complete in the Submission Status column to open the Processed Reclassification Journal Entries page.

      The Processed Reclassification Journal Entries page lists the journal entries created in the submission. The list includes the Type and Amount with a link in the Journal column to the journal entry.

When a journal entry for the reclassification process would exceed 1,000 lines, multiple reclassification journal entries are created. Each of these reclassification journal entries may have up to 1,000 lines. If the 1,000 lines in a journal entry do not offset each other, a placeholder is inserted for line 1,000. The placeholder contains the offset for the first 999 lines and posts to the system-generated Deferred Revenue Clearing account. The next journal entry includes the offset for the placeholder line. Consequently, when all journal entries for the reclassification are posted, the balance in the clearing account is 0. For more information about line limitations in NetSuite, see Line Limitations for Transactions.

Use caution if you must delete a reclassification journal entry. If multiple reclassification entries were created in the period, delete all of them. When you delete reclassification journal entries, the transaction is eligible for reclassification again in the same period. Be sure to run the process again after you have made corrections. If the period is closed, the reclassification journal entries are posted in the period specified in your accounting preferences. The accounting preference that determines the alternate period is Default Posting Period When Transaction Date in Closed Period.

Related Topics

General Notices