What is performance obligation in SAP FI-RA - Revenue Accounting?

SAP Term: performance obligation

• Component: FI-RA

• Component Name: Revenue Accounting

• Description: The contractual commitment of an enterprise to deliver a distinct good or a service to a customer in exchange for a consideration. In , legally non-distinct components of a performance obligation may be managed as separate, non-distinct performance obligations if this is required due to separate management of the components in the operational application.

Smart SAP Assistant

• Key Concepts: 
  Performance obligation is a term used in the FI-RA Revenue Accounting component of SAP. It refers to the contractual obligation of a company to deliver goods or services to a customer. This obligation is usually specified in a contract between the two parties. The performance obligation is then recorded in SAP as an asset, which can be used to track the progress of the contract and ensure that all obligations are met. 
  
  How to use it: 
  In order to use performance obligation in SAP, the contract between the two parties must first be entered into SAP. Once this is done, the performance obligation can be recorded as an asset. This asset can then be used to track the progress of the contract and ensure that all obligations are met. 
  
  Tips & Tricks: 
  When entering a performance obligation into SAP, it is important to ensure that all details of the contract are accurately recorded. This will help ensure that all obligations are met and that any discrepancies can be quickly identified and addressed. 
  
  Related Information: 
  Performance obligations are closely related to revenue recognition, which is also a key concept in FI-RA Revenue Accounting. Revenue recognition is the process of recognizing revenue when it is earned, rather than when it is received. This process helps ensure that companies accurately report their revenue and comply with accounting standards.