What is deferral method in SAP FI-RA - Revenue Accounting?

SAP Term: deferral method

• Component: FI-RA

• Component Name: Revenue Accounting

• Description: The way in which revenue or costs are distributed over a specified period.

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• Key Concepts: 
  Deferral method is a feature of SAP FI-RA Revenue Accounting that allows companies to recognize revenue over time, rather than all at once. This method is used when the company has received payment for goods or services, but the revenue recognition criteria have not yet been met. The deferral method allows companies to spread out the recognition of revenue over a period of time, which can help to smooth out their income statement. 
  
  How to use it: 
  To use the deferral method in SAP FI-RA Revenue Accounting, companies must first set up a deferral account in the system. This account will be used to track the deferred revenue and will be updated as the revenue recognition criteria are met. Once the account is set up, companies can then enter transactions into the system that will be deferred until the criteria are met. 
  
  Tips & Tricks: 
  When setting up a deferral account in SAP FI-RA Revenue Accounting, it is important to ensure that all of the necessary information is entered correctly. This includes setting up the correct deferral period and entering any applicable taxes or fees associated with the transaction. Additionally, it is important to ensure that all transactions are properly recorded in order to ensure accurate reporting. 
  
  Related Information: 
  The deferral method is just one of many features available in SAP FI-RA Revenue Accounting. Other features include revenue recognition rules, deferred tax accounts, and more. Additionally, there are many other accounting systems available that offer similar features and functionality.