Premium Revenue Definition Accounting

Factors determining revenue expenditure.

Premium revenue definition accounting. Often the term income is used instead of revenues. In some cases the product quality is not better but the seller has invested heavily in the marketing needed to give the impression of high. All revenue transactions have been recorded correctly. Under the accrual basis of accounting revenues are recorded at the time of delivering the service or the merchandise even if cash is not received at the time of delivery.

Written premium is an accounting term in the insurance industry used to describe the total amount that customers are required to pay for insurance coverage on policies issued by a company during a. Unearned premium revenue definition a liability account that reports an insurance company s premiums received from its insured that have not yet been earned. All revenues have been recorded in the correct accounting period. Unearned premium revenue is a liability account that is used by an insurer to record that portion of premiums received from customers that it has not yet earned.

Hence they are charged to the income statement in the same accounting year. Sufficient and proper disclosure related to sale revenues have been made. All revenue transactions have been properly classified in accordance with applicable accounting standards. Premium income is any money received by an individual or business as part or all of a premium payment.

For example if the insurance company receives 600 on january 27 for an insured s insurance coverage for the period of february 1 through july 31 the 600 has not been earned as of january 31. For example an insurer receives a 1 200 payment from a customer that is intended to provide insurance coverage for the next year. Fees earned from providing services and the amounts of merchandise sold.