Paladin Data Corp’s accounting calculations and reporting methods—including sales tax reporting—follow generally accepted accounting principles (GAAP) and are designed to reconcile all presented data. Understanding the timing of revenue recognition is key to understanding sales tax reporting in Paladin Point of Sale. Investopedia, a global corporate finance and accounting firm, provides the following summary of revenue recognition:
- “Revenue recognition is a generally accepted accounting principle (GAAP) that stipulates how and when revenue is to be recognized.
- The revenue recognition principle using accrual accounting requires that revenues are recognized when realized and earned–not when cash is received.
- The revenue recognition standard, ASC 606, provides a uniform framework for recognizing revenue from contracts with customers.”
A summary of ASC 606 is provided by the Financial Accounting Standards Board (FASB) and states: “On May 28, 2014, the FASB completed its Revenue Recognition project by issuing Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new guidance establishes the principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers”.
In practice, ASC 606 requires that revenue is recognized when the promised goods or services are delivered to the customer.
Paladin Data Corp. follows the ASC 606 standard and reports sales tax as collected when the customer accepted possession of the goods or services provided by the store.
Paladin Data Corp. clients may use any of the data recorded by Paladin Point of Sale for alternative financial reporting or to support regulatory compliance goals. However, neither Paladin Data Corp nor its employees are able to provide guidance outside of GAAP standard practices. If you need help finding or accessing data in Paladin software to support alternative accounting practices, you can request Paladin training and we will be happy to help. However, Paladin employees cannot discuss or suggest alternative compliance methods.
Tip The Accounting Summary Report provides tax details for a time period you define. Learn more here.
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