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Premium Revenue
According to J.L. Boockholdt, author of the book entitled “Accounting Information Systems”, a revenue cycle includes the accounting transactions that record the generation of a revenue from the outputs of the conversion process. The receiving of an order from a customer, delivering goods or services to the customer, requesting payment from the customer, and receiving the payment are the four economic events that generate revenue.
When the company sells goods or services on credit every time, each of the mentioned economic events will produce a transaction and it is possible that each of those transactions will occur at separate times. On the other hand, if the company sells goods or services on cash, then the economic events will occur at the same time. In that case, the accounting systems record events with only one transaction. The repetition of the cycle is possible whenever the customer pays and the cash receipts will be recorded in the accounting system. Of course, the business is willing to sell goods or services again to the customer.
The order entry, shipping, billing, and the cash receipt systems are the four application systems in the revenue cycle if and only if the company sells on credit. Moreover, the point-of-sale system will be used if the company sells on cash. The point-of-sale system combines the four economic events into one transaction.
All business are engaged in a cycle of basic activities even though their operations are different from each other. Furthermore, all of them produce accounting transactions that should be processed by the accounting system, which is identical to all types of businesses. This paper will only concentrate on the revenue cycle of an insurance company. The definition of premium revenue, summary of the revenue cycle, evaluation, and recommendation will be discussed further in the previous pages.
Premium Revenue is referred to as the income of the insurance companies derived
According to J.L. Boockholdt, author of the book entitled “Accounting Information Systems”, a revenue cycle includes the accounting transactions that record the generation of a revenue from the outputs of the conversion process. The receiving of an order from a customer, delivering goods or services to the customer, requesting payment from the customer, and receiving the payment are the four economic events that generate revenue.
When the company sells goods or services on credit every time, each of the mentioned economic events will produce a transaction and it is possible that each of those transactions will occur at separate times. On the other hand, if the company sells goods or services on cash, then the economic events will occur at the same time. In that case, the accounting systems record events with only one transaction. The repetition of the cycle is possible whenever the customer pays and the cash receipts will be recorded in the accounting system. Of course, the business is willing to sell goods or services again to the customer.
The order entry, shipping, billing, and the cash receipt systems are the four application systems in the revenue cycle if and only if the company sells on credit. Moreover, the point-of-sale system will be used if the company sells on cash. The point-of-sale system combines the four economic events into one transaction.
All business are engaged in a cycle of basic activities even though their operations are different from each other. Furthermore, all of them produce accounting transactions that should be processed by the accounting system, which is identical to all types of businesses. This paper will only concentrate on the revenue cycle of an insurance company. The definition of premium revenue, summary of the revenue cycle, evaluation, and recommendation will be discussed further in the previous pages.
Premium Revenue is referred to as the income of the insurance companies derived