4-4-5 Accounting Calendar
An accounting period is a span of time during which businesses gather, prepare, and organize their financial activity. 4–4–5 Accounting Calendar is one of the methods of managing accounting periods: the first accounting period consists of the first four weeks, the second period consists of the next four weeks, and the third period consists of the next five weeks - in total, the 13 weeks make up the period for quarter, and four quarters combines to account for 52 weeks in an accounting fiscal year.
When 4-4-5 accounting functionality is enabled, RevRec closes the accounting period with a defined fiscal period-end instead of the Gregorian calendar month-end. Revenue recognition is done according to the number of days in a fiscal period which means it works only with RevRec’s Daily Ratable Plan where RevRec calculates the per day revenue of a contract and applies it to the number of days in each fiscal period.
Contact RevRec Support to enable this feature on your RevRec site with the following information in order to set the fiscal year start date and the accounting calendar method:
Week Grouping: 4-4-5, 4-5-4, 5-4-4
Last Day Of Week: Sunday, Monday, Tuesday, Wednesday, Thursday, Friday, Saturday
Last Month of Year: Any month between January and December
Leap Year Strategy: The extra week for every sixth year can be added to: the eleventh or twelfth accounting period.
For example:
If the last day of the week is set to Saturday and the last month of the year is configured as January, then
29th January will be the end of the previous fiscal year as per the calendar date.
30th January will be the start date of the current fiscal year.
RevRec will always use the last week of the month as period end date.
A one-year ratable contract is created with a contract value of $1200 on 15th January 2022. The fiscal year start date is set as 30th January.
As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts on 30th January. With 4-4-5 calendar, the last period of the previous fiscal year consists of 35 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 28-28-35 days routine in the current fiscal year and recognizes revenue accordingly.
A one-year ratable contract is created with a contract value of $1200 on 15th January 2022. The fiscal year start date is set as 30th January.
As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts on 30th January 2022. With group 4-5-4, the last period of the previous fiscal year consists of 28 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 28-35-28 days routine in the current fiscal year and recognizes revenue accordingly.
A one-year ratable contract is created with a contract value of $1200 on 15th January 2022. The fiscal year start date is set as 30th January.
As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts at 30th January 2022. With group 5-4-4, the last period of the previous fiscal year consists of 28 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 35-28-28 days routine in the current fiscal year and recognizes revenue accordingly.
How does RevRec Handle 445 Accounting Calendar?
When 4-4-5 accounting functionality is enabled, RevRec closes the accounting period with a defined fiscal period-end instead of the Gregorian calendar month-end. Revenue recognition is done according to the number of days in a fiscal period which means it works only with RevRec’s Daily Ratable Plan where RevRec calculates the per day revenue of a contract and applies it to the number of days in each fiscal period.
How to Configure?
Contact RevRec Support to enable this feature on your RevRec site with the following information in order to set the fiscal year start date and the accounting calendar method:
Week Grouping: 4-4-5, 4-5-4, 5-4-4
Last Day Of Week: Sunday, Monday, Tuesday, Wednesday, Thursday, Friday, Saturday
Last Month of Year: Any month between January and December
Leap Year Strategy: The extra week for every sixth year can be added to: the eleventh or twelfth accounting period.
For example:
If the last day of the week is set to Saturday and the last month of the year is configured as January, then
29th January will be the end of the previous fiscal year as per the calendar date.
30th January will be the start date of the current fiscal year.
January
| Sunday | Monday | Tuesday | Wednesday | Thursday | Friday | Saturday |
|---|---|---|---|---|---|---|
| 1 | ||||||
| 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| 9 | 10 | 11 | 12 | 13 | 14 | 15 |
| 16 | 17 | 18 | 19 | 20 | 21 | 22 |
| 23 | 24 | 25 | 26 | 27 | 28 | 29 |
| 30 | 31 |
RevRec will always use the last week of the month as period end date.
Examples
Example 1: 4-4-5 Calendar
A one-year ratable contract is created with a contract value of $1200 on 15th January 2022. The fiscal year start date is set as 30th January.
As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts on 30th January. With 4-4-5 calendar, the last period of the previous fiscal year consists of 35 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 28-28-35 days routine in the current fiscal year and recognizes revenue accordingly.
| Acct Period | Acct Period Start Date | Acct Period End Date | Days in Acct Pd | Rev Start/End date | Days of RevRec | Rev Recognized |
|---|---|---|---|---|---|---|
| 2021-12 | 12/26/2021 | 01/29/2022 | 35 | 01/15/2022 | 15 | 49.32 |
| 2022-01 | 01/30/2022 | 02/26/2022 | 28 | 28 | 92.052 | |
| 2022-02 | 02/27/2022 | 03/26/2022 | 28 | 28 | 92.052 | |
| 2022-03 | 03/27/2022 | 04/30/2022 | 35 | 35 | 115.07 |
Example 2: 4-5-4 Calendar
A one-year ratable contract is created with a contract value of $1200 on 15th January 2022. The fiscal year start date is set as 30th January.
As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts on 30th January 2022. With group 4-5-4, the last period of the previous fiscal year consists of 28 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 28-35-28 days routine in the current fiscal year and recognizes revenue accordingly.
| Acct Period | Acct Period Start Date | Acct Period End Date | Days in Acct Pd | Rev Start/End date | Days of RevRec | Rev Recognized |
|---|---|---|---|---|---|---|
| 2021-12 | 01/02/2022 | 01/29/2022 | 28 | 01/15/2022 | 15 | 49.31 |
| 2022-01 | 01/30/2022 | 02/26/2022 | 28 | 28 | 92.05 | |
| 2022-02 | 02/27/2022 | 04/02/2022 | 35 | 35 | 115.06 | |
| 2022-03 | 04/03/2022 | 04/30/2022 | 28 | 28 | 92.05 |
Example 3: 5-4-4 Calendar
A one-year ratable contract is created with a contract value of $1200 on 15th January 2022. The fiscal year start date is set as 30th January.
As per the fiscal calendar, the contract date - 15th January 2022 falls in the last period of the previous fiscal year since the current fiscal year starts at 30th January 2022. With group 5-4-4, the last period of the previous fiscal year consists of 28 days. Therefore, revenue is recognized for 15 days in that period. Furthermore, the system follows a 35-28-28 days routine in the current fiscal year and recognizes revenue accordingly.
| Acct Period | Acct Period Start Date | Acct Period End Date | Days in Acct Pd | Rev Start/End date | Days of RevRec | Rev Recognized |
|---|---|---|---|---|---|---|
| 2021-12 | 01/02/2022 | 01/29/2022 | 28 | 01/15/2022 | 15 | 49.31 |
| 2022-01 | 01/30/2022 | 03/05/2022 | 35 | 35 | 115.07 | |
| 2022-02 | 03/06/2022 | 04/02/2022 | 28 | 28 | 92.05 | |
| 2022-03 | 04/03/2022 | 04/30/2022 | 28 | 28 | 92.05 |
Updated on: 30/06/2022
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