Donation is the wrong way to think of it from an accounting perspective (though perhaps not from a legal recourse perspective.) Preorders are not recognized as

Donation is the wrong way to think of it from an accounting perspective (though perhaps not from a legal recourse perspective.) Preorders are not recognized as revenue. They are a debit (increase) to Cash and a credit (increase) to a liability that's usually Unearned Revenue. As you ship, you credit (increase) Revenue/Sales and then debit (decrease) the Unearned Revenue liability account. Edit: renamed 'Prepaid' to 'Unearned' -- had to brush up on my GAAP nomenclature