Post Earned Revenue

This Help File Page was last Modified on 03/31/2018

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Post Earned Revenue

This Help File Page was last Modified on 03/31/2018

Before using this feature, please read the Understanding Earned and Referred Revenues chapter.

For General Ledger System Users - When Earned and Deferred Revenues are being tracked (established by running the Deferred Revenue Setup Wizard)

Thereafter, when the Auto Billing procedure is executed:

a.The Gross Amount (including Sales Tax, if charged) of each Recurring Revenue Sale is Debited (added) to the Accounts Receivable Asset Account (a Mandatory Account)

b.The Net Amount (not including any Sales Tax) is Credited (added) to the associated Deferred Revenue Liability Account

c.When Sales Tax is charged, the Amount of that Sales Tax is Credited (added) to the appropriate Sales Tax Payable Liability Account (i.e., Local, National, or both, as required).

 

The Post Earned Revenue dialog is used to periodically calculate, distribute, and post Deferred and Earned Revenues to the appropriate General Ledger Accounts' balances, and record them in the Transaction File and Account Register.

During this Post Earned Revenue procedure:

1.The proportioned Earned Revenue Amount for each Detail Line Item is Posted (added) to the Detail Line Item's EarnedAmount field (an internal system field that is not visible to the User)

2.The Invoice Header of any Invoice with a Recurring Revenue Sale (containing one or more Detail Line Item(s) that were assigned a Recurring Revenue Sale-Purchase Item) will also have the currently calculated Earned Revenue Amount Posted (added) to its EarnedAmount field (an internal system field that is not visible to the User)

Therefore, the Invoice Header will contain the most recently updated Total of all of the Earned Revenue for that Invoice.

 

Earned & Deferred Revenues are calculated on a Monthly basis as follows:

1.When the Sale Date recorded on the Invoice is dated in the month before the Month and Year of the Period To Bill chosen in the Auto Billing dialog; and the Starting Day - which is identified in the Billing Cycle record - is the the First day (i.e., day '1') of the Month and Year of the Period To Bill chosen in the Auto Billing dialog, then your Company is Billing in Advance, and will not be Deferring the first month's Revenue.  

a.Therefore, the first month of the Month and Year of the Period To Bill is "Earned" at the end of that first month (which is the end of the first Month and Year of the Period To Bill chosen in the Auto Billing dialog,

b.So when Billing in Advance, the first month of this Recurring Revenue will be fully earned at the end of the month after the month of the Sale Date.

 

2.When the Sale Date recorded on the Invoice is dated in the month before the Month and Year of the Period To Bill chosen in the Auto Billing dialog; but the Starting Day - which is identified in the Billing Cycle record - is Not the First day (e.g., it is day '2'...'31') of the Month and Year of the Period To Bill chosen in the Auto Billing dialog, then your Company is Billing in Advance, but will be Deferring the first month's Revenue to the following month.  

a.This is because the first month of the Month and Year of the Period To Bill is "Earned" ends after the first Month and Year of the Period To Bill chosen in the Auto Billing dialog,

b.So first month of this Recurring Revenue will be fully earned two months after the month of the Sale Date.

 

3.When the Sale Date recorded on the Invoice is within the Month and Year of the Period To Bill chosen in the Auto Billing dialog; and the Starting Day - which is identified in the Billing Cycle record - is the First day (i.e., day '1') of the Month and Year of the Period To Bill identified in the Auto Billing dialog, then your Company is not Billing in Advance, nor Deferring the first month's Revenue.  

a.Therefore, the first month of the Period Covered is "Earned" at the end of that first month.

 

4.When the Sale Date recorded on the Invoice is within the Month and Year of the Period To Bill chosen in the Auto Billing dialog; but the Starting Day - which is identified in the Billing Cycle record - is Not the First day (e.g., it is day '2'...'31') of the Month and Year of the Period To Bill identified in the Auto Billing dialog, then your Company is not Billing in Advance, but will be Deferring that first month's Revenue.  

a.This is because the first month of the Month and Year of the Period To Bill is "Earned" ends after the first Month and Year of the Period To Bill chosen in the Auto Billing dialog,

b.So first month of this Recurring Revenue will be "Earned" in the following month.

 

For General Ledger System Users - When a Recurring Revenue Item is billed automatically, the question is:

When is the Recurring Revenue Earned for the First Month of the Period of Service being billed, and when is that First Month's Recurring Revenue Deferred to the next Month?

a)When the Auto Billing Sale Date entered is the First day of the First Month of the Period of Service being billed, and the Starting Day - which is identified in the Billing Cycle record - is the First day (i.e., day '1') of the Month and Year of the Period To Bill identified in the Auto Billing dialog, the first month's Recurring Revenue is Earned immediately (posted on the last day of that First Month);

b)Otherwise, that First Month's Recurring Revenue is Deferred until the next Month as described below (these are the only other possible cases):

i.The Auto Billing Sale Date entered is dated in the Month before the First Month of the Period of Service being billed (i.e., your Company Bills in Advance), and the Starting Day - which is identified in the Billing Cycle record - is the First day (i.e., day '1') of the Month and Year of the Period To Bill identified in the Auto Billing dialog, therefore the Recurring Revenue is Deferred to the next Month (which in this case is actually the First Month of the Period of Service being billed);

ii.The Auto Billing Sale Date entered is dated either in the month before or within the first month of the Month and Year of the Period To Bill identified in the Auto Billing dialog, but the Starting Day - which is identified in the Billing Cycle record - is after the First day (e.g., it is day '2'...'31') of the First Month of the Period of Service being billed, so the Revenue for this First Month of the Period of Service being billed is not fully earned until the following Month, therefore the Earned Recurring Revenue for this First Month is Deferred to the following Month.

c)When using this Post Earned Revenue process, Earned Revenue should be posted to the General Ledger System no sooner than the Last Day of the selected Month being posted, regardless of whether that process is run at the end of the Month and Year being posted, or in a subsequent (later) Month.

 

For General Ledger System Users - When Earned and Deferred Revenues are being tracked:

Once each month, this Post Earned Revenue dialog is used to calculate the Earned Recurring Revenue for a designated Accounting Period

a.The Deferred Revenue Liability Account is Debited (reduced) by the Value of the Recurring Revenue that was Earned during this Accounting Period

b.The Sales Account assigned to the associated Recurring Revenue Item is Credited (increased) by the Value of the Recurring Revenue that was Earned during this Accounting Period

c.The Current Earnings Equity Account (a Mandatory Account) is Credited (increased) by the Value of the Recurring Revenue that was Earned during this Accounting Period

d.The Earnings Posting Expense Account (a Mandatory Account) is Debited (increased) by the Value of the Recurring Revenue that was Earned during this Accounting Period

 

To Post Earned Revenue,

Access the Post Earned Revenue Form using either of these two methods:

a)From the Backstage Menu System Select File and Choose the Receivable Menu, then Click the Post Earned Revenue option, or

b)From the Quick Access Menu, Select File and Choose the Receivable Menu, then Click the Post Earned Revenue option.

 

Any previously Posted Earned Revenue Summary records are listed on the Post Earned Revenue Form.

 

HelpFilesPostEarnedRevenueDialog

Post Earned Revenue Form

Find - Click on this HelpFilesFindIconWithLabel Icon to display the Search text field, and the Find and Clear buttons to view previous Earned Revenue Posting data.

 

HelpFilesPostEarnedRevenue-Find&Clear

 

Find - Enter text to search for a specific record.

Up to 10 previously entered search text is saved for future reference.

Clear - To remove the text to search for entry, Click the Clear option.

Click on this HelpFilesFindIconWithLabel Icon again to remove the Search text field, and the Find and Clear buttons.

 

Post - Click the Post button.

Do you bill a month in Advance? - If presented with this question: Answer Yes unless the Sale Date of the Invoices created when billing the Recurring Revenues always falls within the actual Period Covered (i.e., Date Range) in which those service(s) will actually be provided.

 

HelpFilesDoYouBillAMonthInAdvance-NoCheck

Do you bill a month in advance?

 

Remember answer and don't ask again - Check this box if this should be the default answer.

oThis setting may be changed later by resetting the Bill In Advance option to False ("F") in the Company Settings Form.

 

Important Note: This Post Earned Revenue procedure must be executed each month after all of the month's Recurring Revenue Sales have been Invoiced (using the Auto Billing procedure).

 

HelpFilesPostDeferredRevenueConfirmation

 

Confirm that this Post Earned Revenue process is to be executed.

The process runs to completion

A new Earned Revenue record is inserted in the Post Earned Revenue Form.

 

A Posted Earned Revenue table is maintained internally with a summary of the Earned and Deferred Revenues posted during the execution of each Post Earned Revenue procedure.

 

HelpFilesPostEarnedRevenueRecords

 

All of the previously Posted Earned Revenue records are listed on the Post Earned Revenue dialog.

To Exit, Click the Close box HelpFilesCloseBoxto Close this Post Deferred Revenue dialog.

 

Review - In the General Ledger System:

When Earned and Deferred Revenues are being tracked in the General Ledger System:

1.The Gross Amount (including Sales Tax, if charged) of each Recurring Revenue Sale is Debited (added) to the Accounts Receivable Asset Account (a Mandatory Account).

2.The Net Amount (not including any Sales Tax) is Credited (added) to the associated Deferred Revenue Liability Account

3.If Sales Tax was charged, the Amount of that sales tax is Credited (added) to the appropriate Sales Tax Payable Liability Account (i.e., Local, National, or both, as needed).

4.Then, once each month, the Post Earned Revenue dialog is used to calculate the Earned Recurring Revenue for a selected Accounting Period. Where for each detail line item

a.The Deferred Revenue Liability Account is Debited (reduced) by the Value of the Recurring Revenue that was Earned during the Accounting Period

b.The (Revenue) Sales Account assigned to the Recurring Revenue Item is Credited (increased) by the Value of the Recurring Revenue that was Earned during the Accounting Period

c.The Current Earnings Equity Account (a Mandatory Account) is Credited (increased) by the Value of the Recurring Revenue that was Earned during the Accounting Period

d.The Earnings Posting Expense Account (a Mandatory Account) is Debited (increased) by the Value of the Recurring Revenue that was Earned during the Accounting Period

 

When you Post Earned Revenue for a negative Recurring Revenue detail line item it will do exactly the opposite.

a.The Deferred Revenue Liability Account is Credited (increased) by the Value of the Recurring Revenue that was Un-Earned during the Accounting Period

b.The (Revenue) Sales Account assigned to the Recurring Revenue Item is Debited (decreased) by the Value of the Recurring Revenue that was Un-Earned during the Accounting Period

c.The Current Earnings Equity Account (a Mandatory Account) is Debited (decreased) by the Value of the Recurring Revenue that was Un-Earned during the Accounting Period

d.The Earnings Posting Expense Account (a Mandatory Account) is Credited (decreased) by the Value of the Recurring Revenue that was Un-Earned during the Accounting Period

 

Viewing the Deferred and Earned Revenue Financial Transactions posted to the Transaction File Form:

 

HelpFilesTransactionFilePostedEarnedRevenues

Transaction File Form - Post Deferred & earned Revenue Transactions

 

Deferred Revenue is identified as "DR" (Deferred Revenue for the associated Liability Account) in the Document Type column for each of the (Deferred Revenue) Debit entries shown above.

Earned Revenue is identified as "ER" (Earned Revenue for the associated Sales Account) in the Document Type column for each of the (Earned Revenue) Credit entries shown above