But for some business or legal requirements you might intend to defer the accounting processes till certain activities are performed like confirmation from the customer that the goods have been received at the correct shipping location.
Companies that build bridges or aircraft take years to deliver the product to the customer. In this case, the company cannot just recognize the revenue in the period in which they have sold the product/service as this would result in an incorrect reporting of the PL statement. As per the business requirement the company can recognize different revenue amounts in different accounting periods.
Using event-based revenue management, Receivables can automatically evaluate your invoices to determine whether to immediately recognize revenue, or temporarily defer revenue to an unearned revenue account. Revenue is subsequently recognized depending on certain events, such as customer acceptance or receipt of payment. Receivables makes these automatic revenue recognition or deferral decisions based on your organization's established revenue policy, and the existence of any revenue contingencies on the invoice line.
Revenue contingencies are terms and conditions in a sales contract or order that prevent revenue from being immediately recognized, based on strict revenue recognition requirements mandated by US GAAP and International Accounting Standards. Typical contingencies that can delay revenue recognition are fiscal funding clauses (for government contracts), cancellation clauses, customer acceptance clauses, customer creditworthiness, nonstandard payment terms, and nonstandard refund policies.