The assignment: investigate a quarterly close difference
A fictional controller needs a quarterly revenue schedule and a reconciliation to a draft ledger. You receive six contracts, invoice records, cash receipts and three monthly booked-revenue totals. One invoice appears twice. Two service-start assumptions in the draft ledger are wrong. Your job is to reconstruct the schedule and explain the proposed correction.
The case stipulates one evenly delivered service per contract, equal calendar-month satisfaction and unconditional enforceable invoices when issued. There are no opening balances, taxes, refunds, credits, financing, impairments, contract modifications or unbilled revenue. Those assumptions allow the mechanics to be tested; they are not conclusions about any real contract.
The IFRS Foundation’s IFRS 15 overview connects revenue with the transfer of promised goods or services and satisfaction of performance obligations. This project does not replace that assessment. It starts after a simplified recognition pattern has been stipulated and asks whether the records implement it consistently.
Data and worked inputs
Sources[1]
Use contract and invoice identities, not customer-name guesses
Resolve invoice identity before totaling billings. The duplicate I2 row matches the same invoice, contract, month and amount, so one row is a retry. Valid invoicing totals $73,800 after that duplicate is removed. A repeated invoice ID with a changed amount would require investigation rather than automatic deletion.
Join invoices to contracts and receipts to invoice IDs. Every supplied record should resolve. A receipt lacking an invoice link is an exception even when its dollar amount happens to match a bill. Equal amounts do not establish identity, and a contract can have more than one payment.
Keep billing and payment dates independent from service dates. C2 is invoiced in January and paid in February, but its service period begins in February. C5 is invoiced and collected in March for a service beginning in April. Those are exactly the cases a cash-based shortcut would mishandle.
Build the recognition schedule from inclusive service months
C1 provides twelve months at $1,000 per month. C2 provides twelve at $2,000, starting in February. C3 provides six at $1,000, starting in March. C4 provides three at $3,000. C5 provides twelve at $1,500, starting in April. C6 provides twelve at $400. Count both the starting and ending months when deriving duration.
| Month | Valid billings | Cash collected | Expected revenue |
|---|---|---|---|
| January | $49,800 | $18,000 | $4,400 |
| February | $6,000 | $27,000 | $6,400 |
| March | $18,000 | $24,000 | $7,400 |
| Quarter | $73,800 | $69,000 | $18,200 |
January expected revenue is $4,400: C1, C4 and C6. February adds C2, producing $6,400. March adds C3, producing $7,400. C5 contributes nothing in this quarter under the stipulated April start. Quarterly revenue is $18,200.
The draft ledger books $6,400, $6,400 and $8,900, totaling $21,700. The $3,500 excess is consistent with including C2’s $2,000 one month early and C5’s $1,500 one month early. That establishes the mechanical difference under this case. In real work, the underlying contract evidence and authorized review would determine the final accounting correction.
Reconcile receivables and the contract liability separately
With zero opening receivables and no other movements, ending receivables equal billings less collections: $73,800 − $69,000 = $4,800. That amount corresponds to C6’s unpaid invoice. A receivable reconciliation is a collection question; it does not establish when service is delivered.
Under the case’s unconditional advance-billing assumption, the contract-liability rollforward begins at zero, adds billings and subtracts recognized revenue. Ending liability is $73,800 − $18,200 = $55,600. It does not equal cash received less revenue, which would incorrectly exclude the billed-but-unpaid advance for C6.
The monthly liability balances are $45,400, $45,000 and $55,600. Receivables are $31,800, $10,800 and $4,800. Keep both schedules visible. A balanced cash reconciliation cannot validate a service-start date, and a correct revenue pattern cannot establish that the customer paid.
Write the proposed correction without pretending to approve it
The controller-facing note should give the size, source and period of the difference. Avoid a generic “revenue mismatch” message that forces the reviewer to reconstruct the investigation.
Original fictional close-review memo
Make the contract-month table the center of the work sample
Produce one row per contract and service month, then summarize by month. A calendar index such as year × twelve plus month makes inclusive duration explicit and avoids approximating every month as thirty days. Daily recognition would be a different stipulated pattern, not an automatic improvement.
Keep invoice deduplication, receipt matching and revenue calculation as separate steps. Test a reversed service interval, an unknown contract ID and a conflicting repeated invoice. Each should stop the calculation or appear in an explicit exception report rather than disappear into a final total.
For an extension, move one service start by a month while preserving twelve service months, and recompute both the quarter and the ending liability. Show the effect without changing the invoice or cash date unless the scenario says those also move. This demonstrates that you understand the independent events, not merely the reference totals.
Data and worked inputs
Use the sample for accounting roles, not as fictional client experience
A suitable project description is: “Reconciled synthetic contracts, advance billings, receipts and booked revenue; identified a $3,500 service-date difference and built separate receivable and contract-liability rollforwards.” State that it is an independent practice case. You did not complete a real company’s close or issue an accounting opinion.
Be ready to explain why the liability adds unconditional advance billings rather than cash in this case. Also explain when that simplification would fail: conditional rights, modifications, multiple obligations or another recognition pattern would need additional analysis. Listing those possibilities is not enough; identify which input or rule you would revisit.
The best final artifact is small enough to inspect: the contract-month schedule, the two rollforwards, an exception log and a brief memo. A dashboard can follow later. The core evidence is that a reader can trace each amount to its contract and understand why it belongs in the reporting period.