Revenue accounting is the process of receiving, organizing and recording payments and invoicing, recording, tracking, and collecting loans and other types of debt receivable on customer accounts. Revenue accounting provides essential tools for determining and keeping track of the revenue generated.
In business, revenue means the income that a firm actually receives from its activities, especially from sales of products and / or services to customers. Consistent revenue growth is essential for a firm to attract investors to its publicly traded stock. However, revenue is less important than profit to investors. The word 'top line' is also used to represent the term 'revenue,' because in a company's profit and loss account, revenue is usually placed at the top, and all other costs and expenses below that.
'Revenue recognition' is one the four major principles listed in the US generally accepted accounting principles (GAAP). The other three include the 'historical cost principle,' 'matching principle' and the 'full disclosure principle.'
Data capture, preparation, accounting, auditing, reconciliation, management reporting, and interline billing are the main processes involved in revenue accounting. Airline revenue accounting system is a good example. Its objective is to provide scheduled passenger airlines with a computerized solution to cater to the needs of passenger revenue accounting departments.
Revenue accounting has now grown more complex and auditors are now examining financial records in finer details. Unfortunately, many accounting systems do not handle complex revenue processes well because they are designed for simple revenue processes. You can automate revenue accounting by using software packages. They help you mange multiple business models, corporate entities, and currencies.
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