How To Create A New Deferred Revenue Entry In Odoo
Given that many work-related responsibilities may now be completed digitally, it is logical to assume that many sellers are considering expanding their brands to include an online store. However, attempting to explore a website on your own adds a whole other degree of difficulty that you may encounter, especially if you are unfamiliar.
Not to mention that you may have a significant risk of running into a lot of confusing IT jargon and challenging ways to set up the site when creating a website for your online business. Even if you know that, managing every aspect of your business is still incredibly challenging.
Since we have every intention to make the process of handling a website more effortless and user-friendly, the Odoo software has a wide variety of easily configured functions and features. In this specific tutorial, we will go over How To Create A New Deferred Revenue Entry In Odoo.
Table of contents
- Why are Deferred Revenues important for your business?
- How To Create A New Deferred Revenue Entry In Odoo
Why are Deferred Revenues important for your business?
Customer payments paid in advance for goods or services that have not yet been rendered are known as deferred revenues, sometimes known as unearned revenue.
The company that receives such payments is liable for the items or services that it still owes to its clients. Since the payments will be earned in the future, the corporation cannot include them on the present Profit and Loss statement or Income Statement.
Until they may be recognized, either all at once or over a certain period, on the profit and loss statement, these future revenues must be postponed on the company’s balance sheet.
For accurate reporting of assets and liabilities on a company’s balance sheet in accordance with the matching concept, deferred revenue accounting is crucial. Brands are thus prevented from exaggerating their profitability. Deferred revenue is also important to the business as it finances operations. Consequently, the strain on other assets is reduced, or a loan is not required.
How To Create A New Deferred Revenue Entry In Odoo
Now that we have just gone through the definition of deferred revenues along with their importance to your business, it is high time we started learning how to create an entry for it in Odoo Accounting.
1. Create new entry
By choosing the Deferred Revenue option from the Accounting menu, you may view and create new deferred revenues in the Odoo Accounting module. The list of deferred revenue along with the specifics, which include the Name of the Revenue, First Depreciation Date, Book Value, Depreciable Value, Currency, Company and Status of the revenue is showcased.
Please click the Create button to create a new entry for deferred revenue. When doing so, you will be met with a form entry to fill out. Keep in mind that to connect this new entry to an existing journal item, click on Select Related Purchases. The journal entry is now presented in the Related Sales tab after some fields are automatically filled up. From now, please fill out the fields mentioned below accordingly:
- Deferred Revenue Name: please provide the name designated for the revenue.
- Original Value: Choose the amount from the connected purchases or manually enter the product’s original purchase price.
- Acquisition Date It is important to specify the date the revenue was acquired in this field.
For the Depreciation Method, please fill in these fields:
- Number of Recognition: Enter the exact time needed for the recognition to be valid.
- Prorata Temporis: always activate this feature for every new deferred revenue form you make.
- First Recognition Date: Enter the day the form is validated.
As for the Currency Values section, you only need to select your preferred currency in the Currency drop-down menu. Both the Residual Amount to Recognize and Deferred Revenue Amount will be automatically filled in for you using another database.
Under the Accounting section, the fields that require information are:
- Company: Enter the name of your business.
- Revenue Account: Enter the name you appointed for the revenue account.
- Deferred Revenue Account: Enter the name you assigned for the deferred revenue account.
- Journal: Enter the name of the journal entry that contains other deferred revenue forms.
The next step would be to generate all the available values on the Revenue Board. The Compute Revenue button can be used to calculate revenue. By selecting the Posted Entries option, you may view the journal entries connected to the deferred revenue. You can view the revenue board of the revenue at the bottom by validating the created delayed revenue.
2. Use Prorata Temporis feature
The term Prorata Temporis has different definitions, depending on which line of work you are working in. When it comes to Odoo Accounting, this specific function helps you choose the date from which to compute depreciation. If it is activated, the depreciation period begins on the asset’s creation date.
With this feature, rather than using the default time between recognitions, the first entry on the Revenue Board is calculated based on the amount of time remaining between the Prorata Date and the First Recognition Date.
For instance, the Revenue Board mentioned above reports its first revenue as $4.22 rather than $70.00. As a result, the final entry, which has a value of $65.78, is also lower.
3. Create Deferred Entry from the Sales Journal
A financial transaction called a Deferred revenue journal entry is used to record revenues for a good or service that hasn’t yet been supplied. When a consumer prepays a business for anything, deferred revenue, sometimes referred to as unearned revenue or unearned income, occurs.
One notable feature of Odoo is that you can create one deferred entry from a specific journal item in your Sales Journal. A straightforward way to do so is that from the Accounting dashboard, you can click on the Accounting button. After that step, you can now access the Sales button, and simply pick out any journal item you are thinking of deferring.
Before we can conduct the next step, you need to make sure that the journal item you intend to work on is posted on the correct account, and that no information you previously entered is inaccurate. Then, select Create Deferred Entry from the Action drop-down menu, click it, and complete the form as you normally would to create a new entry like the instructions above.
It can be difficult for business owners to keep track of their expenses and incomes. Nevertheless, regardless of your level of accounting software skill, Odoo makes it simple for everyone to create and manage invoices and bills. Odoo includes all the resources you require to start and run your business in terms of accounting and supplier billing.
With the aid of Odoo Accounting, you can effortlessly and simply handle your company’s finances in addition to customizing the website appropriately. Many unnecessary activities have also been automated for your own convenience. Thanks to the user-friendly dashboards that make sure they have all the information they need at their fingertips, retailers can concentrate on operating their businesses rather than attempting to figure out how to keep track of their finances.
You have officially reached the conclusion of our tutorial on How To Create A New Deferred Revenue Entry In Odoo if you are reading this! Please feel free to save this page so that you may use it at any time for reference or when you are onboarding a new employee to help you grow your business.
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