Fig. 01 · Glossary
Revenue Recognition
Also known as Rev Rec, ASC 606
Definition
Revenue recognition defines when revenue can be recorded under accounting standards and company policy. In technology companies, issues often arise from implementation services, multi-element contracts, usage-based pricing, annual prepay, reseller arrangements, support obligations, and contract modifications.
Revenue recognition problems do not only affect accounting. They affect valuation, covenants, board trust, and earnout design.
If sales, finance, and delivery cannot explain the difference between booked, recognized, billed, and collected revenue, the company is not ready for buyer scrutiny.
Human Renaissance glossary · operator-grade definitions · Research methodology
