Revenue Recognition
Phone Contract Example — Period Entry Accounting
A customer signs a 24-month phone contract. They receive a phone immediately and a service over the contract period. How do we recognise the revenue?
Step 1️⃣ Contract Payments
Step 2️⃣ Split Performance Obligations
Service Value = Total Contract Value − Phone Price (sold separately)
Step 3️⃣ Select Report Period
Step 4️⃣ View Timeline
Create transactions to see timeline
📋 Revenue Recognition Schedule
| Performance Obligation |
Recognition |
Period |
Total Value |
Revenue in Period |
Cash in Period |
Accrual |
📊 Financial Reports
Profit & Loss (to period end)
Phone Revenue (point-in-time)
£0.00
Service Revenue (over time)
£0.00
= Total Revenue
£0.00
Balance Sheet (at period end)
Assets
Bank Balance
£0.00
Trade Receivables
£0.00
Total Assets
£0.00
Liabilities
Deferred Income
(£0.00)
Total Liabilities
(£0.00)
Net Assets = Profit
£0.00