"Groupon is a commissions based business; as I understand it, such businesses do not count an entire deposit as revenue."

They take title in the sense that they are paying (although paying late) and buying a certain amount of product (after they have received orders.) A commission would be if the same thing happened and the restaurant forwarded x% of the sale to groupon.

Here's an example. You are a programmer and I send you a customer. The customer gives you $5000 worth of work. You pay me $500. So you collect the money and pay me a commission. Other way: I get the $5000 from the customer (I have the contract with them) and pay you $4500 for what you have done (and have added risk etc.)

In the case of the first example I don't book $5000 in sales. In the case of the second example I do book $5000 in sales. (Forget the margins there are many businesses (supermarkets) that operate on small margins.)

Now, for accounting purposes there could be reasons that I don't want to book $5000 in sales even though I could (stuff they don't teach in school btw.) Like if I book more sales then there might be some local gross receipts tax whereby I have to pay % of sales etc (or something like that). Of course if I am applying to a bank for a loan maybe I want the higher sales because they will be more impressed. This by the way is why you need to know as much as you can because professionals won't always tell you all the things you need to know to have the best outcome.

> They take title in the sense that they are paying (although paying late) and buying a certain amount of product (after they have received orders.) A commission would be if the same thing happened and the restaurant forwarded x% of the sale to groupon.

No, they work on a commission--the product they sell is the future services/products of a company who they have agreed to sell on behalf of. It's like TicketMaster collecting money for an event and then paying the promoter in a lump sum less agreed upon commissions (and yes, TM only counts their take as revenue).

Groupon doesn't buy a certain amount of product, they collect revenue and then pay out based on receipts. No products are purchased, they're simply a third party affiliate that has an email list and sales force.

> Here's an example. You are a programmer and I send you a customer. The customer gives you $5000 worth of work. You pay me $500. So you collect the money and pay me a commission. Other way: I get the $5000 from the customer (I have the contract with them) and pay you $4500 for what you have done (and have added risk etc.)

That's a horrible analogy. A better one is you make an agreement with a programmer who has a software package. You will sell the software for an agreed upon price and then split the proceeds 50/50. Your revenue is whatever your cut is, you're working on commission. This is exceedingly common online for affiliate programs, the only difference is Groupon approaches the business about starting the affiliate program just for them.