Accounting
ASC 606
Quick definition
GAAP revenue recognition standard for contracts with customers.
ASC 606 is the US GAAP standard for recognizing revenue from contracts with customers. It requires a 5-step model: identify the contract, identify performance obligations, determine transaction price, allocate price, and recognize revenue as obligations are satisfied. Matters for SaaS (deferred revenue), usage-based pricing, and multi-element arrangements.
Related accounting terms
See this in action
Insights and tools where ASC 606 shows up.
Frequently asked questions
- What is ASC 606?
- ASC 606 is the US GAAP standard for recognizing revenue from contracts with customers. It requires a 5-step model: identify the contract, identify performance obligations, determine transaction price, allocate price, and recognize revenue as obligations are satisfied. Matters for SaaS (deferred revenue), usage-based pricing, and multi-element arrangements.
- Why is ASC 606 important for startups?
- ASC 606 is a accounting concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does ASC 606 belong to?
- ASC 606 is a Accounting term in the StartupCFO finance glossary — alongside other accounting concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about ASC 606?
- Beyond this definition, see the related accounting terms below, or explore StartupCFO's insights and tools that put ASC 606 in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
Service spotlight
Need ASC 606 revenue recognition?
Multi-element arrangements, performance obligations, contract modifications — our CPAs build your revrec policy and apply it to every contract.
