Contract Revenue

Contract revenue refers to the income a company earns from providing goods or services based on a formal agreement with a customer. It is recognized when the company has fulfilled its contractual obligations, such as delivering products or completing services, rather than when payment is received. This approach ensures that revenue is accurately matched to the period in which the work was performed, providing a clear picture of the company’s financial performance during that time. In essence, contract revenue reflects the earnings from specific contractual commitments made between a business and its clients.