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.
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 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.
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 !
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.
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.
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?
Hey i got this question on the test - Company A enters into a 10-year lease with company B that commences on 1/1/2024, at which point the space on that tower is reserved for Company A. Company A installs equipment on the tower on 1/1/2025, however, the customer will not begin paying rent until 1/1/2028 and will continue to pay for 10 years. Monthly rent begins at $2,000 and escalates 2.5% annually upon cash receipt. When should TI start and stop recognizing GAAP revenue from this contract? Is it from 2024 thru 2033 (10 years after comm date) or is it 2024 thru 2037 when cash payments stop?
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
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!
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.
So, if the accounting software takes the invoice to AR and Revenue, then the reversal of the accrual would hit in the same month as the month of the invoice date, so total revenue for this invoice is correct? Please advise. It would look a lot cleaner if there were six monthly invoices.
:) 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.
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!
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?
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%)
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.
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.
Excellent points made here!
Thanks
This was good and straight to the point. I've been out of financial accounting for a while. I always need to be refreshed on these topics.
I appreciate your thoughtful approach. Demonstrating with a T account makes things so much clearer. .
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!
Oh I remember you brother. Please keep me updated on your career progress
@@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 examples and explanations.
Glad you think so!
Excellent way of explaining the concept… thank you!!
Glad it was helpful!
I love your videos and your way of explaining bill.. thanks from Bangalore, first viewer always
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 !
Excellent, I am so happy to hear this!
Hey this was an excellent video with a very comprehensive example. I really enjoyed it. Your a real good teacher.
I appreciate that!
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.
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.
Hi…your video is very informative…I would want you to do more videos on different complexities arising in revenue recognition….from Bangalore, India
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?
Today I leaned flux accounting..thanks
So helpful, thank you!
Glad it was helpful!
Awesome video! WOW. So easy to understand and funny!:) Thank you for your great work!
Thank you! 😃
Waiting for more videos like this
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!
Interesting point regarding financing. I will look into it
Hey i got this question on the test - Company A enters into a 10-year lease with company B that commences on 1/1/2024, at which point the
space on that tower is reserved for Company A. Company A installs equipment on the
tower on 1/1/2025, however, the customer will not begin paying rent until 1/1/2028 and will
continue to pay for 10 years. Monthly rent begins at $2,000 and escalates 2.5% annually
upon cash receipt. When should TI start and stop recognizing GAAP revenue from this contract? Is it from 2024 thru 2033 (10 years after comm date) or is it 2024 thru 2037 when cash payments stop?
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
I would like to more example to explain, in nExt videos can you show IT INDUSTRY HOW TO RECOGNISE
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!
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.
Can you make a video on accounting consulting job including details of salary, job description, work life
So, if the accounting software takes the invoice to AR and Revenue, then the reversal of the accrual would hit in the same month as the month of the invoice date, so total revenue for this invoice is correct? Please advise. It would look a lot cleaner if there were six monthly invoices.
:) 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.
Shouldn't the contract state "monthly delivery" instead of having to confirm with the supply team?
It’s a good point.
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!
I agree with you. If paid for 6 months in advance, then Dr. cash, and CR unearned revenue; then at the end of each month, Dr. Cash, and Cr Revenue
reclass to deferred revenue
please also share excel file for practice in every video.
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?
Did you figure this out?
@@Makeupaddict026 nah
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%)
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.