Revenue Recognition ASC 606 Explained via Example
Join 10,000+ professionals who enrolled in the Controller Academy 🚀
controller-academy.com/course...
[coupon 30OFFCOURSE for 30% discount]
Videos mentioned here:
1) Various ways to analyze financial statements
• How To Analyze Financi...
2) How to develop month-end close checklist
• How To Create Month En...
Chapters:
00:00 Intro
01:04 The Accounting Error
01:21 The Wrong Approach
03:44 The Correct Approach
08:39 Recap
What we cover in this video:
The example we are showing today involves an accounting error in revenue recognition. We will look at how a bad/clueless accountant deals with the situation and then we will see how a good accountant managed the same issue….
-----------------------------------
Hang Out with me on social media:
📸 / the_financial_controller
📱 / thefinancialcontroller
/ bill-hanna-cpa-7653a851
DISCLAIMER: Links included in this description might be affiliate links. If you happen to purchase a product or service with the links that I provide I may receive a small commission. There is no additional charge to you! Thank you for supporting my channel so I can continue to provide you with free content each week!
All views expressed on my channel are mine alone. Not intended as financial or professional advice
Пікірлер: 38
I appreciate your thoughtful approach. Demonstrating with a T account makes things so much clearer. .
I love your videos and your way of explaining bill.. thanks from Bangalore, first viewer always
Excellent video! As for the close checklist, I’d even say the check for new contracts should be performed throughout the month especially for companies with higher volumes of major contracts. Also need to ensure business unit leaders always send copies of new contracts to accounting once executed. Then, accounting can review throughout the month and maybe have a weekly or monthly meeting to ensure revenue schedules, etc are being set up properly. This way, everything doesn’t pile up during close week.
@TheFinancialController
2 ай бұрын
Excellent points made here!
@RA-kd3ne
2 ай бұрын
Thanks
Been following you since u were under 100k subscribers and have learned so much. Graduating next month with my bachelors in accounting and very excited to see how far i can go in the field! Thanks Bill!
@TheFinancialController
2 ай бұрын
Oh I remember you brother. Please keep me updated on your career progress
@920WIZCO
2 ай бұрын
@@TheFinancialController I actually have a job offer lined up for a finance analyst role in a few weeks. ( Doing accounting items though) Very nervous for my first day, but there is a team there and I will take really good notes too my first few weeks.
Excellent explanation of ACS 606. It’s really very informative video with practical scenario.
Accounting aside, that company needs to be praising their Sales and Marketing department that apparently brought them a pure profit contract because the cost of sales stayed in line with the original revenue figures. 😃 Just having a little fun with ya! Keep up the great work. I do enjoy your videos and content.
@TheFinancialController
2 ай бұрын
haha. nice catch. But note that Cost of Sales rose about 5% each month, and revenue should have been recorded monthly as well. Meaning, if revenue is spread out correctly, you'll see that monthly margins look reasonable.
Awesome video! WOW. So easy to understand and funny!:) Thank you for your great work!
@TheFinancialController
2 ай бұрын
Thank you! 😃
Waiting for more videos like this
Hey this was an excellent video with a very comprehensive example. I really enjoyed it. Your a real good teacher.
@TheFinancialController
29 күн бұрын
I appreciate that!
Amazing content Bill. I already work as an Accounting analyst. Your videos are helping me understand complicated topics with practical examples. You are literally helping me take my career ahead by helping me build this knowledge base. I rarely ever comment on youtube but i felt obligated to let you know how your effort is helping rookies like me grow in our careers. Thank you !
@TheFinancialController
2 ай бұрын
Excellent, I am so happy to hear this!
Today I leaned flux accounting..thanks
Hi thanks for this information, very helpful, however, can you help explain how to treat a third party transaction and also how to recognise the revenue from the principal party?
reclass to deferred revenue
I would like to more example to explain, in nExt videos can you show IT INDUSTRY HOW TO RECOGNISE
Would you say there's a financing component to the delayed payment, as well? What would the accounting treatment be, if so? Thank you for this video!
@TheFinancialController
2 ай бұрын
Interesting point regarding financing. I will look into it
:) I had no idea that both accountants were the same. It must have been the glasses. Thank you Bill, there would be no accountants without a good Bill.
Thanks for the video! One question, how to adjust the closed month’s journals ? Like we found out the problem in June, and we missed accrued revenue from Jan to May? Do we reopen the Jan to May book? Thanks!
@TheFinancialController
2 ай бұрын
If you are a small company with a few investors, you might be able to open the books Jan-May. If larger company and frequent reporting, you'd book it all in June and add footnote about the matter to the financials.
Hello, your videos are really helpful …I have a question not related to this video….not sure where to ask…sorry.We introduced cash in form of capital and booked cash to capital entry. We spend the entire cash and plan not to use the account again and inactived that account. Now our equity account show that cash balance, I think our equity is inflated….am I correct or what treatment is required.Thanks
Can you make a video on accounting consulting job including details of salary, job description, work life
Shouldn't the contract state "monthly delivery" instead of having to confirm with the supply team?
@TheFinancialController
2 ай бұрын
It’s a good point.
what about the deffered revenue (as a liability)? we should book $6m unbliied as dr and def rev as cr at Jan '24 and when invoice to the customer we dr $1m AR and cr unbilled and $1m dr def rev and cr revenue and also with the cost (10 or 15%)
Hi! I am wondering any journal entry needed to be recorded by every month 30th? And what journal entries we need to book for the even recoognition of $1m for every month?
@Makeupaddict026
26 күн бұрын
Did you figure this out?
@leimengz6438
24 күн бұрын
@@Makeupaddict026 nah
please also share excel file for practice in every video.
Why dont you CR the Accrued Rev. account for the 6M and DR the cash for the same amount when you receive the cash? My argument is that Accrued Rev. is already an AR account, so there is no need to DR to another AR account. thank you!
This example is way too easy. Talk about complex things. Discounts, promises that are not $$ specified, hidden promises, warranty, cancellation, subscription. How to be sure what’s delivered and what’s not.