When setup for accrual accounting, QuickBooks will recognize revenue as of the transaction date listed. For example, if an annual dues invoice is dated January 1st, QuickBooks will recognize all the revenue on that day. There is no built-in revenue recognition feature to automatically spread the income over the twelve-month period for dues invoices.
There are a number of QuickBooks apps available that are designed to automatically recognize revenue according to rules that you can setup. However, many of our customers find it easier to handle revenue recognition as part of their monthly accounting work using QuickBooks' native reports.
Best Practices from other Novi Customers
Mark Sullivan, Controller for the Atlanta Apartment Association has extensive experience with both Novi AMS and QuickBooks. He manages his organization's monthly revenue recognition using a Deferred Dues Realization Report Template that he created. Mark shared the report with us so that our other Novi customers could benefit from it.
You can learn more about Mark's process and hear from other Novi customers in this revenue recognition deep dive:
Typically, deferred revenue is managed in QuickBooks Online using Other Current Liability accounts. Monthly journal entries pull the revenue out of the deferred liability account and recognize it in the appropriate GL account, in the appropriate month.
Using the template below through the entire year, AAA uses their Deferred Dues Realization Report to calculate how much dues revenue needs to be recognized each month.
Confidential financial information has been removed and false data has been used.
Download example Year-End Completed Report (pictured above)
In this report, rows 10 - 31 represent new dues income and renewal dues income by month. Throughout the year, each month, add your dues income to column B ("amount"), and then formulas throughout the spreadsheet will automatically calculate how much to be recognized each month.
Using rows 33 and 34 (or row 35 if you don't track new and renewing dues income separately), you'll quickly know how much revenue to recognize each month.
Each month, save the report with a new name to keep a record of each month's report just in case you ever need to go back.
Customize the report to fit your needs. For example, use the cells below each month to track your Journal Entry numbers.
A huge thank you, again, to Mark and the Atlanta Apartment Association for sharing this report!