Accrual Accounting is a method of accounting that defers or holds revenue until service is delivered. For example, if a patron pays in March for a class that occurs in May, the revenue is placed in a holding account often called Deferred (or Unearned) Revenue (a Liability Account) until the date the class begins. On the date the class begins, the revenue is moved from the holding account to the actual revenue account (Revenue Account) reflecting earnings for that class.
The accounting is reflected as so:
|March 15||Cash or A/R||75|
|March 15||Deferred Revenue||75|
|May 15||Deferred Revenue||75|
|May 15||Class Specific Revenue||75|
All of these GL entries are created on the date of the original transaction and the system will accrue the revenue and reverse the deferred revenue on the “effective date” (the date of service or start date) of each item.
This setup requires CivicRec staff in order to complete. Although you may be able to change some settings, you should not make these changes without first contacting CivicRec. You will still need to Create Initial Accounts for CivicRec staff to set up accrual accounting.
Reporting of Deferred Revenue
- Deferred Revenue Balances for a Time Period
- Deferred Revenue Transactional Detail for a Time Period
- Determine the Revenue Accounts Affected by Deferred Revenue
Note: The total for the General Ledger Detail report for all Deferred Revenue accounts should match the General Ledger Summary Net for the same accounts for matching date ranges.