← Glossary
GLOSSARY
ASC 606
The US GAAP standard for revenue recognition.
The longer version
ASC 606 is a five-step framework: identify the contract, identify performance obligations, determine the transaction price, allocate it to the obligations, and recognize revenue as obligations are satisfied. It applies to almost every commercial contract.
Why it matters in your books
Under ASC 606, "we got paid" is not the same as "we earned the revenue." For SaaS, services, and bundled offerings, getting this wrong overstates current-period revenue and creates a deferred-revenue mess down the line.
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