Revenue Recognition

Definition

Revenue is recorded when the service is delivered, not when cash is collected — the revenue-side application of accrual accounting.

Worked Example

Customer pays $1,200 on January 1 for a 12-month subscription:

Cash received Jan 1:              $1,200
Revenue recognized in January:      $100
Deferred revenue (liability):     $1,100

Each later month: +$100 revenue, -$100 deferred revenue.

Interpretation & Pitfalls

A pile of annual-plan cash is not profit; it is an obligation being worked off month by month.

In TupicFinance

Revenue events are recorded against delivery periods, keeping recognized and deferred revenue distinct.