Regarding Revenue

[Former Member]

HI Guru's.

Can i know where we have to see revenue recognisation in SD? Could u please give full detailed information and usage of revenue recognisation?

Thanks & Regards,

chandrasekhar reddy.

[Former Member]

HI REFER BELOW

<a href="http://web.mit.edu/cao/www/SB2002/AS/VF44.htm">Revenue Recognition</a>

Revenue is the sum of invoiced sales without sales tax. You record this in the general ledger — the company reports revenue periodically in an income statement. When you issue invoices for the booked sales, but the service or goods are not yet delivered, the related expenses are not booked. This inflates your profit margin. For this, the revenue recognition process is important to reflect a true picture of the income statement.

Revenue is typically the single largest item reported in a company’s financial statements. As with the bottom line and cash flows, companies’ reported revenues are not only significant to these companies’ financial statements in dollar terms, but also in the weight and importance that investors place on them in making investment decisions. When a company makes revenues from its operations, it must record these revenues in the general ledger (G/L), and then report on the income statement every reporting period.

The revenue recognition functionality in R/3 separates the revenue recognition process from the billing process. This functionality is available with Release 4.6C and in mySAP ERP Central Component (ECC) 5.0 and ECC 6.0. The setup of the revenue recognition function is a joint task by Sales and Distribution (SD) and Financial Accounting (FI) teams, although the configuration setting in SAP falls in the SD area.

SD processes set up and initialize revenue recognition. Therefore you assign the revenue recognition method to an item category in SD customizing. Revenue recognition then affects FI by account postings. This is a deviation from the way standard SAP was initially developed for billing and transferring revenue to FI, which makes implementing revenue recognition trickier. As a result, although the capability has been around for some time, many companies do not take advantage of it. The configuration is poorly understood because has several peculiarities. The process I describe shows you how to navigate through this configuration.

I’ll take you through the four steps of SD and FI customizing to set up revenue recognition. To separate the billing process from the revenue recognition process, you create two additional balance sheet accounts in the FI module for the grouping and monitoring of revenues. To explain the process, I’ll use the example of a service and maintenance contract that is valid for 12 months. For more information about the concept of revenue recognition, see the sidebar “Understanding Revenue Recognition.”

[Former Member]

Hi,

The revenue recognition function described below may only be used after it has been agreed and released by a member of the SAP development department.

Many companies require that revenues are calculated according to time period. This means that the revenues must be implemented in the posting period, in which the service was carried out, and not in the posting period in which the billing document was set up. The revenue recognition function in the SAP R/3 system helps you to fulfill these requirements and separate revenue recognition from the billing process. The R/3 system offers a flexible solution to companies with various methods of revenue recognition.

Revenue recognition enables revenues to be calculated and established easily and flexibly using set rules. This new function is part of the Sales and Distribution (SD), Financial Accounting (FI) and Controlling (CO) application components and enables comprehensive and integrated revenue recognition.

The new revenue recognition function lets you decide when revenue recognition should take place. You can select those methods relevant to your area, which best meet your company’s requirements.

• Revenue recognition at the point of billing (standard method)

• Time-related revenue recognition (the revenues are implemented between set specific dates in equal proportions)

• Service-related revenue recognition (the revenues are realized on the basis of a specific event, e.g. a delivery)

Many systems require that the revenues from a sale are indirectly credited after invoicing in the general ledger. The revenue recognition function gets rid of this restriction and enables you to separate revenue recognition from the billing process. On the basis of the criteria which you have established for the contract or order item, you can implement revenue before, during and after billing.

A further function of revenue recognition is the grouping and surveillance of revenues in two additional general ledger accounts.

-->non-billed receivables

-->calculated revenue

You can see in these accounts whether revenue has been implemented but not yet set up in the invoice or has been set up in the invoice but not yet implemented.

Also go thorugh following links

http://help.sap.com/saphelp_crm40/helpdata/en/23/663d4050d89523e10000000a1550b0/frameset.htm

http://help.sap.com/saphelp_47x200/helpdata/en/46/74a073b4e411d199bc0000e8a5bd28/content.htm

Regards

Ali

Message was edited by:

Ahmad Ali Shaik

[Former Member]

Hi,

Pls goto Basic Functions - Account assignment - revenue recognition, you will be able to get all the details and also make use of F1 help on the same menu. Sufficient info is available over there.

Hope it helps.