In this definition
Revenue and cash receipts
Recognized revenue is not the same as cash collected. ASC 606 addresses revenue recognition for contracts within its scope; issuing an invoice or receiving cash does not by itself settle every recognition question.
Start with the contract and delivery records
Keep the customer contract, promised deliverables, pricing, changes and delivery evidence together for review. Recognition depends on the contract and applicable requirements.
Authoritative reference
FASB identifies Topic 606 as Revenue from Contracts with Customers. See its revenue recognition project summary for the standard and related updates.
Common questions
What Is Deferred Revenue?
Deferred revenue represents cash received for goods or services not yet delivered to customers. This liability appears on balance sheets until companies fulfill their obligations through delivery or service completion. Common examples include subscription payments, advance deposits, and prepaid service contracts that span multiple accounting periods.
Is Revenue the Same as Profit?
Revenue and profit are fundamentally different financial metrics with distinct strategic implications. Revenue measures total income before expenses, while profit represents income remaining after subtracting all costs. Companies can generate high revenue while experiencing losses if expenses exceed income, making profit the ultimate measure of business success.