About recognition of revenue and expenses

When you enter an invoice in the Sales invoices (AR301000) window, each time you select an item in a line on the Document details tab, the deferral code automatically appears in the Deferral code column if a deferral code has been previously defined for the stock item or non-stock item in its settings (if not, you can still select a deferral code in the required document line manually). When an invoice requiring deferral is released, the system generates one deferral schedule for each deferral code in the document.
If multiple lines have the same code, one schedule for all lines with the code is generated.

A deferral schedule contains the list of recognition transactions, each of which the system releases in the specified financial period to recognise a portion of the revenue.
You can use the Deferral schedule (DR201500) window to view the schedules and adjust them manually if needed.
As the revenues are earned, they are moved from the balance sheet liability account (the deferral account) to an income account (the sales account specified in the invoice) in multiple recognition transactions.

If no items on an invoice require deferral (that is, if no deferral codes are defined for the items), the total sales amount of the invoice is recorded to the revenue account upon release of the invoice; that is, the revenue is recognised during the post period. If some items on the invoice require deferral, revenue from the sale of other items (those with no deferral code assigned) is still recognised immediately.

Generally, for purchased items, costs or expenses are recognised immediately on release of the appropriate invoices. Deferrals may be required for services, warranties, and other expenses that are usually defined in the system as non-stock items. When you enter an invoice by using the Purchase invoices (AP301000) window and add a line for a non-stock item with a deferral code assigned, the deferral code appears in the Deferral code column by default (if a deferral code is not specified in the non-stock item settings, you can still select a deferral code in the document line manually). Once the invoice is released, the system generates the schedules automatically.
The system generates a schedule for each deferral code in the document, and multiple items can be in one schedule.

You can review and manually edit the schedule by using the Deferral schedule (DR201500) window.
The schedule shows how many transactions expenses will be recognised in and when these transactions will occur.
Expenses are deferred to a balance sheet asset account (deferral account) until the expenses are used up or expired.
At that time, they are moved to the expense account specified in the invoice.

You can generate recognition transactions for both revenue and expenses in the Run recognition (DR501000) window.
Each time you run a schedule, only one recognition transaction is released and posted — even if, according to the schedule, multiple such transactions for a schedule are due.

You use the Deferral transaction summary (DR402000) window to view the transactions that have been posted.
Also, in the Deferral schedule (DR201500) window, you can see which deferral transactions have been posted and which have yet to be posted.