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Startup Accounting

Gross vs. Net Revenue (Principal vs. Agent)

Written by Nirmala Murugesan

Curated by Rubric Financial

Last updated

1 / 5

Gross or Net: The Question That Moves Your Top Line

  • Reporting revenue gross (the full amount a customer pays) versus net (only your cut) can change reported revenue several-fold.
  • The answer turns on one ASC 606 question: are you the principal or the agent in the transaction?
  • Getting it wrong is a classic diligence finding, and correcting it can slash a headline revenue number.
  • Marketplaces, resellers, and platforms that pass payments through are most at risk of overstating.

Go deeper on this topic: SaaS Revenue Recognition Under ASC 606: A Founder's Guide to Getting It Right→

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About the author

Nirmala MurugesanCA, CPA

Partner, Accounting

CA and CPA with 20+ years across U.S. GAAP, IFRS, and cross-border entity accounting. Leads accounting and controllership at StartupCFO: clean close, audit-ready books, and multi-entity structures for venture-backed startups.

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