Revenue follows performance, not merely cash collection. The five-step framework identifies the contract, identifies distinct performance obligations, determines the transaction price, allocates that price and recognizes revenue when or as each obligation is satisfied. The exercises use simplified facts to practice this reasoning under US GAAP terminology; IFRS uses a substantially converged framework for these examples.
An annual subscription received in advance usually begins as a liability and is earned over the service period. Gift cards remain obligations until redemption or a supported breakage policy applies. A bundle may require allocation using relative standalone selling prices. Expected returns reduce recognized revenue and create a refund liability. Estimates require evidence; do not recognize uncertain amounts simply because cash has arrived.