The income generated

from sale of goods or services,

of capital or assets, associated with

the

or

main operations of

any

other

use

an organization before

any costs or expenses are deducted. Revenue is shown usually as the top item in an income
(profit and loss) statement from which all charges, costs, and expenses are subtracted to
arrive

at net

income.

The impressive revenue figures shown on our profit and loss statement were reduced
significantly

after

our

monthly

business

expenses

were

deducted.

Revenue is the amount of money that a company actually receives during a specific period,
including discounts and deductions for returned merchandise. It is the "top line" or "gross
income" figure from which costs are subtracted to determine net income.
Revenue is calculated by multiplying the price at which goods or services are sold by the
number of units or amount sold.
For

company,

this

is

the total amount of money received

by

the

company

for goods sold or services provided during a certain time period. It also includes all net
sales, exchange of assets; interest and any other increase in owner's equity and is calculated
before
Net

any expenses are

income can

In terms of

be

calculated

reporting

revenue

by
in

subtracted.

subtracting
a

expenses

from

company's financial

revenue.
statements,

different companies consider revenue to be received, or "recognized", different ways.

Revenue is the money you collect for providing a product or service.
Revenue is different from earnings, which is what's left of your revenue after subtracting the
costs of producing or deliveringthe product or service and any taxes you paid on the amount y
ou took in.
When corporations release their financial statements, those that provide services, such as pow
er or telecommunicationscompanies, describe their income as revenues, while those that man
ufacture products, such as lightbulbs or books,describe their income as sales.

The money a government collects in taxes is also called revenue. The US body that collects t
hose taxes is called theInternal Revenue Service (IRS). In the United Kingdom, it's Inland Re
venue.
The total rent, sales, or earnings of a company. When negotiating for the purchase of incomeproducing property, be sure toinquire about the seller's definition of revenue rather than make
the assumption that the seller is using the correctterminology to describe figures supplied to y
ou. Contrast with income.
Revenue is a crucial part of financial statement analysis. The companys performance is measured to the
extent to which its asset inflows (revenues) compare with its asset outflows ( expenses). Net income is the
result of this equation, but revenue typically enjoys equal attention during a standard earnings call. If a
company displays solid top-line growth, analysts could view the periods performance as positive even if
earnings growth, or bottom-line growth is stagnant.

Revenue is used as an indication of earnings quality. There are several financial ratios attached to it, the
most important being gross margin and profit margin. Also, companies use revenue to determine bad debt
expense using the income statement method.

Different Types of Revenue

At a high level, we'll start by splitting revenue into "operating" and "nonoperating." Operating revenue is much like we've already described:
income from sales, services provided, etc. It's the money you earn from the
core activities of your business. Non-operating revenue can be thought of
as income on the side, perhaps passive. It's money earned that falls
outside your business' core offerings.
And this is where the different types of revenue:

Operating revenues are those that come in to a business from the companys
main or core business activities. This is the area through which a company earns
most of its income. A software development company generates revenues by
developing software or modules. Examples of operating revenue: Sales, rental
income or providing services. Operating revenue is considered as the lifeblood of

any company, as the high amounts of operating revenue is indicative of having or

maintaining stable cash position.
Non-operating revenue or other income includes revenues earned
from a companys outside of its normal operations. These are the revenues that
are associated with secondary operations of a business entity not with main,
central or core activities. An example of non-operating revenue is the income
generated from the sale of subsidiary or division. Since its not to be sold again,
the income is a one- time occurrence. It may further be understood this way; for
example, if an institution is offering training and development services, the main
source of revenue (operating revenue) is associated with the training and
development activities being regarded as core operations of the institution. Since
the institution might receive gifts, bequests or donations, it is to be recorded as
non-operating revenue as such revenue might not be associated with the main
activities of the institution.

The common revenue accounts are as follows:Revenue/sales/fess These accounts are used to record the revenues earned
from the main activities of a business entity. It is better to assign particular
names to the accounts, so that the identification and the required analysis may be
made smoothly.
Interest revenue This revenue comes from an investment- usually from
bank.
Rental revenue it is used to record the revenue that is received by providing
rental services, such as, building, equipment etc.
Dividend revenue It is recorded when dividend on the stock is earned from
other companies that pay dividends.

In addition, it is important to mention contra revenue accounts. Contra revenue

accounts, as the name suggests, have apposite nature of accounts. They are
contrasted with revenue accounts. Such as, sales return and sales discounts. Both
are used to offset the relevant accounts or to reduce the value of the related
account. Its a way of better portraying the relationship between certain debits
and credits.