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Revenue Recognition

Former Member
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Hello,

I would like to understand the concept of Revenue Recognition in SAP,specifically role of Vf42,VF44 and RRGR batches.

Regards,

Kapil

Accepted Solutions (0)

Answers (2)

Answers (2)

Former Member
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Dear Kapil,

I would like to share my thoughts on Revenue recognition for you , I generally call this as

REVREC.

Especially this happens in project based industries , such as construction companies and high tech software companies , predominantly it is used by them.

Before Getting in to SAP  , one needs to know what is REV REC , functionally . Meaning as per the accounting practices , when can a particular sales can be recognized as revenue in the books of account.

Having said that , what could be the different modes of recognizing the revenue , we need to understand that  which I would like to list below:

Time based Revenue recognition - Based on time

Occurrence based/Service based  revenue recognition- Based on occurrence of an event

Standard revenue recognition - Normally invoicing .

So lets go bit deep in to the SAP way , probably I should say answering to you specific questions:

Predominantly the Standard SAP practice of recognizing revenue is at the time billing  , so typically most of the companies want to follow this methodology.

So obviously what happens is during billing the Sales Revenue Gets Credited and the AR control account get debited.

This is the ideal situation.

Now for the companies who would like to implement REV REC , they create multiple item categories and laid down the set ups , how the revenue can be recognized.

If a SAP customer has activated REV REC and set up item categories  ,

The Debit goes to AR control account and the Credit goes to Deferred Revenue account

The main fundamental behind this is you can move the value from deferred revenue account to sales revenue account using VF44 , this is where this tcode is used.

With respect to transaction code VF42 , it is basically used to update the SD documents.

Hope I have answered your question.


Former Member
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Thank you so much guys for making this clear!

Former Member
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Dear Anand,

Thanks for your inputs!

Can you please clearify below points.

1. What is SD document.

2.Can you describe in bit about the use of Vf42.

3.What is the use of RRGR batch which is used in revrec.

Laszlo_B
Active Contributor
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Hello Kapil,

here are some basic documents, which explain the basic concepts of Revenue Recognition:

These documents unfortunately do not explain the mentioned roles and batch, so you might want to ask the question in Space http://scn.sap.com/community/erp/financials/controlling, where Revenue Recognition-related problems are discussed.

Best regards,

Laszlo

Former Member
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Hi Kapil,

To answer specific questions about Transaction Code: VF42 in reference to the Revenue Recognition:

Let assume we are talking about revenue recognition for the scenario posting goods issue or the billing data transfer--

In these scenarios, after certain process steps, the revenue recognition run or after changing the documents, the revenue recognition data that is already saved on the database must be changed and adjusted to the current valueswithin a process that is relevant for revenue recognition. For example, after a price change. There are two options to execute the update. You can either use the direct update, or you can select the documents for the update and then update them separately using transaction code - VF42, Report SDRRAV54.


The revenue recognition data that is generated by SD processes relevant for revenue recognition result in postings in Financial Accounting, and have a direct impact on the profit and loss statement and the retained earnings. For this reason, the revenue recognition data must comply with the known accounting standards and legal requirements.

To compare the revenue recognition data in SD and FI to detect possible data inconsistencies in the SD and FI modules, a regular monitoring is required.

The Transaction Codes : VF43, VF45, VF47, VF48, FB03, FS10N, FBL3N are helpful for this purposes.

You can navigate 'New version of Best Practices for revenue recognition' through OSS-1172799.

Thank you very much.

Thanks & Regards

Subhasish