2 min lesson
ASC 606 in five steps
Rebuild the sequence in "ASC 606 in five steps" from memory, ending with the check that proves the outcome.
Step 1 of 3
Order-to-Cash moves money. Record-to-Report decides what that money means on the income statement and the rulebook is ASC 606The US revenue-recognition standard; cited as the canonical judgment-heavy accounting work to keep human-led rather than hand to an agent, because facts and circumstances vary deal to deal. Press Enter for the full definition..
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Full explanation
Cash timing is not revenue timing
A customer who prepays $120k for an annual plan gives you $120k of cash on day one and roughly $10k of recognized revenue per month. The other $110k sits in deferred revenue, a liability, until you deliver. The whole reason a revenue subledger exists is that this gap between cash and earned revenue has to be tracked contract by contract, period by period.