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When you should use revenue recognition depends on the engagement contract type. Time & Materials, Not To Exceed, or Fixed Price. The table below explains common reasons to use Rev Rec for each of these.

Contract TypeReasons to use Revenue Recognition
Time & MaterialsUsed rarely, revenue recognition is typically used to generate a reserve for the end of your engagement.contract
Not to ExceedUsed when you have reached your cap. Use revenue recognition to spread the revenue over the life of the engagement.contract. Some organizations that don't anticipate exceeding the cap by much will simply write down time cards for the remainder of the project rather than running revenue recognition.
Fixed PriceUsed frequently. Lock down revenue to specific time periods.

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You can manually specify how much revenue should be recognized through the Revenue Recognition Wizard

Revenue Recognition Status