I am new to bookkeeping and had a question in regards to what the gross revenue of a company is based on. For instance, is gross revenue based off of what is invoiced for the month or what money was deposited that month?
Gross Revenue Question
Answers
It depends on whether you are Accrual or Cash basis. With Accrual basis, cash is recognized when you invoice the customer, not when it is collected. The reverse is true for Cash basis when the customer pays you the money is recognized when it is collected, not when it was invoiced.
Hi Andrea -- Welcome to the world of Bookkeeping! There is an online textbook for the Principles of Accounting. You might read the chapter on Revenue Recognition (it's a quick read) to go a little deeper: https://www.principlesofaccounting.com/chapter-3/expense-recognition/
Sharon is right though; Cash Basis = Received, Accrual Basis = Invoiced.
The tricky part is when can you really invoice?
To answer the tricky part about the timing of invoicing - it is the time, when the goods are physically leaving the property of the seller on its way out to be delivered to the buyer. So, don't be surprised when you see hectic trucking traffic on the last days of the year in industrial areas.
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