From the course: Advanced Bookkeeping Techniques
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Recording revenue with assets that slowly build up
From the course: Advanced Bookkeeping Techniques
Recording revenue with assets that slowly build up
- The right to receive some revenue-based cash flows builds up slowly over time. Examples are interest, royalties, and online advertising revenue. The right to receive these cash payments builds up and then periodically the amount receivable is collected in cash. For example, as soon as a company or an individual deposits money in an interest bearing account, the interest revenue starts to build. And if the depositor decides that all of that built up interest is to be reinvested in the account, it might be the case that the interest builds up and is not received in cash until years later. Another example is online advertising revenue. Google generates the majority of its revenue through advertising it places on its Google Search and YouTube pages. Google reports the following about its revenue recording process. "We recognize revenue each time a user clicks "on the ad, when the ad is displayed "or a user views…
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