Unearned / Deferred Revenue is when payments are received before the invoice issued date. An example of unearned/deferred revenue is collecting deposits for re-enrollment contracts for the next fiscal year. Note: The general ledger account must have a Type of “Unearned Revenue” or “Deferred Revenue.” There are two approaches to consider when recording unearned/deferred revenue in PCR Educator. 1. Manual Revenue Recognition - Recording the unearned/deferred revenue on the invoice line items: Using this approach, a manual journal entry must be made to move the amounts from unearned/deferred revenue (liability) to revenue (income). Note: Use this approach when the revenue must be recognized in a prorated manner over the course of the year. 2. Earn Date Revenue Recognition - This method involves managing deferred revenue recognition across various scenarios and transaction types. It begins by understanding the conditions under which revenue should be deferred, such as when a receipt is associated with an invoice. The approach varies depending on scenarios like “Earn on Receipt Earn Date Only,” "Earn on Invoices Before Earn Date," and "Earn on Invoices Always," each dictating when revenue is recognized. Overall, the method ensures accurate and compliant deferred revenue recognition, optimizing financial reporting and management. Note: In the examples below, we've adopted a system where Debits are displayed as positive numbers, while Credits are represented as negative numbers. This method ensures that the total comes out to zero when we sum up all the credits and debits. It's important to note that due to this convention, Revenue might appear as a negative number, even though it signifies gains. Earn Date Only: A receipt of $5000 on March 1st will be earned on July 1st. Since this is for Earn Date Only, invoices do not matter.
Earn on Invoices Before Earn date: