Revenue Recognition Journal Entry
The Blue Onion Revenue Recognition journal entries show the removal of deferred revenue and recognition of revenue on the income statement at the time of fulfillment. This provides accurate accrual-based accounting for e-commerce and SaaS companies.
Navigation
You can find the Filtered View of the Orders Journal Entry by opening the Journal Entries menu on the left side dark blue menu and selecting Filtered View.
The Orders Journal Entry will open first by default, you can select the Revenue Recognition Journal Entry by using the Journal Entry Type filter as shown below.
Revenue Recognition
For e-commerce companies, the revenue recognition entries record revenue at the time products are shipped and fulfilled to the customer.
- Split shipments are recognized at the line item level even when occurring across periods
- Shipping revenue is recognized in full at the time of the first shipment
For SaaS companies, show revenue recognition is based on the passage of time during the subscription term.
- Blue Onion accounts for the number of days in a given subscription and recognized revenue daily as the term of the subscription passes
- Discounts are also prorated over the term of the subscription
Journal Entry Details
Deferred revenue is reduced (debited, in net) in the same way it was originally recorded in the Orders Journal Entry, broken out into:
- Gross revenue/sales - comprised of all line items fulfilled or all subscriptions valid during the period
- Shipping revenue - comprised of all shipping revenue collected from customers for fulfillments in period
- Discounts - comprised of all line item discounts for items fulfilled or subscriptions valid during the period
Filtering And Grouping
Revenue recognition can be segmented across revenue sources like channels, locations, and even SKUs or be aggregated to show no segmentation. Additionally, you can filter by these same parameters as well as Country, State, Order Tag or Discount Code to isolate smaller segments of revenue for discrete reporting.
Blue Onion also provides a segment mapping tool where you can create your own custom revenue recognition segments to use within journal entries as well.
Overall, these journal entries ensure proper revenue recognition timing and segmentation based on your business's revenue model.