How to Record Revenue for Uninstalled Materials
Recognizing revenue for materials delivered to a site but not yet used in construction, where margin is restricted.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost of Goods Sold | Expense | 15,000.00 | - |
| Revenue | Revenue | - | 15,000.00 |
| Inventory (Project Materials) | Asset | - | 15,000.00 |
💡 Accountant's Note
If control of uninstalled materials passes to the customer, revenue is recognized to the extent of costs incurred (zero profit) until installation begins.
Practitioner & Systems Framework
💻 ERP Architecture
Use a 'Material on Site' project tracking code to separate cost-only revenue from progress-based revenue.
⚠️ Audit Flags
Inflated profit margins on construction projects with large material deliveries.
📄 Required Documentation
Delivery receipts and project status reports.
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