solution-1

[Former Member]

Hi,

please give the solution that how revenue recognition happen in sap?

Thanks,

Rashmi

[Former Member]

hi

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

please follow the link

http://help.sap.com/saphelp_46c/helpdata/en/59/aff239d85c11d199d60000e8a5bd28/frameset.htm

Edited by: WISH on Mar 27, 2008 3:17 PM