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In
accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compare with other ob ...
, revenue is the total amount of income generated by the sale of
goods and services Goods are items that are usually (but not always) tangible, such as pens, salt, apples, and hats. Services are activities provided by other people, who include doctors, lawn care workers, dentists, barbers, waiters, or online servers, a book, a ...
related to the primary operations of the
business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a business name A trad ...

business
. Commercial revenue may also be referred to as sales or as turnover. Some
companies A company, abbreviated as co., is a legal entity In law, a legal person is any person A person (plural people or persons) is a being that has certain capacities or attributes such as reason, morality, consciousness or self-consciousness ...

companies
receive revenue from
interest In and , interest is payment from a or deposit-taking financial institution to a or depositor of an amount above repayment of the (that is, the amount borrowed), at a particular rate. It is distinct from a which the borrower may pay the len ...

interest
,
royalties A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset o ...

royalties
, or other
fees A fee is the price one pays as remuneration for rights or services. Fees usually allow for overhead, wages, costs, and markup. Traditionally, professionals in the United Kingdom (and previously the Republic of Ireland) receive a fee in cont ...
. This definition is based on IAS 18. "Revenue" may refer to income in general, or it may refer to the amount, in a
monetary unit A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" in the most specific sense is money Image:National-Debt-Gillray.jpeg, In a 1786 James Gillray caricature, the plentiful money bags handed t ...
, earned during a period of time, as in "Last year, Company X had revenue of $42 million". Profits or
net income In business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a busines ...
generally imply total revenue minus total expenses in a given period. In
accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compare with other ob ...
, in the balance statement, revenue is a subsection of the Equity section and revenue increases equity, it is often referred to as the "top line" due to its position on the
income statement An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a ''profit and loss statement'' (P&L), ''statement of profit or loss'', ''revenue statement'', ''statemen ...
at the very top. This is to be contrasted with the "bottom line" which denotes net income (gross revenues minus total expenses). In general usage, Revenue is the total amount of income generated by the sale of goods or services related to the company's primary operations Sales revenue is income received from selling goods or services over a period of time.
Tax revenue Tax revenue is the income In microeconomics, income is the Consumption (economics), consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictiona ...
is income that a government receives from taxpayers.
Fundraising Fundraising or fund-raising is the process of seeking and gathering voluntary financial contributions by engaging individuals, businesses, charitable foundations, or governmental agencies. Although fundraising typically refers to efforts to gathe ...

Fundraising
revenue is income received by a
charity Charity may refer to: Giving * Charitable organization or charity, a non-profit organization whose primary objectives are philanthropy and social well-being * Charity (practice), the practice of being benevolent, giving and sharing * Charity (virtu ...
from donors etc. to further its social purposes. In more formal usage, revenue is a calculation or estimation of periodic income based on a particular
standard accounting practice Publicly traded companies typically are subject to the most rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms opera ...
or the rules established by a government or government agency. Two common
accounting methods A basis of accounting is the time various financial transactions are recorded. The cash basis (EU VAT vocabulary ''cash accounting'') and the accrual basisAccrual (''accumulation'') of something is, in finance, the adding together of interest or ...
,
cash basis accounting A basis of accounting is the time various financial transactions are recorded. The cash basis (EU VAT vocabulary ''cash accounting'') and the accrual basis are the two primary methods of tracking income and expenses in accounting. Both can be ...
and
accrual basis accountingAccrual (''accumulation'') of something is, in finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. ...
, do not use the same process for measuring revenue. Corporations that offer shares for sale to the public are usually required by law to report revenue based on
generally accepted accounting principles Publicly traded companies typically are subject to the most rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms oper ...
or on
International Financial Reporting Standards International Financial Reporting Standards, commonly called IFRS, are accounting standard Publicly traded companies typically are subject to the most rigorous standards. Small and midsized businesses often follow more simplified standards, plus ...
. In a
double-entry bookkeeping system Double-entry bookkeeping, also known as, double-entry accounting, is a method of bookkeeping Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organisations. It involves ...
, revenue accounts are
general ledger In bookkeeping Bookkeeping is the recording of financial transactions, and is part of the process of accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantificat ...

general ledger
accounts that are summarized periodically under the heading "Revenue" or "Revenues" on an
income statement An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a ''profit and loss statement'' (P&L), ''statement of profit or loss'', ''revenue statement'', ''statemen ...
. Revenue account-names describe the type of revenue, such as "Repair service revenue", "Rent revenue earned" or "Sales".


Non-profit organizations

For
non-profit organization A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in contrast with an entity that o ...
s, revenue may be referred to as gross receipts, support, contributions, etc. This operating revenue can include donations from individuals and corporations, support from government agencies, income from activities related to the organization's
mission Mission may refer to: Religion *Mission (station) A religious mission or mission station is a location for missionary work, in particular Christian missions. History Historically, missions have been religious communities used to spread ...

mission
, income from fundraising activities, and membership dues. Revenue (income and gains) from investments may be categorized as "operating" or "non-operating"—but for many non-profits must (simultaneously) be categorized by fund (along with other accounts).


Association dues revenue

For non-profits with substantial revenue from the dues of their voluntary members: non-dues revenue is revenue generated through means besides association membership fees. This revenue can be found through means of
sponsorships Sponsoring something (or someone) is the act of supporting an event, activity, person, or organization financially or through the provision of products or services. The individual or group that provides the support, similar to a Benefactor (law), ...

sponsorships
,
donations A donation is a gift for Charity (practice), charity, humanitarian aid, or to benefit a cause. A donation may take various forms, including money, alms, Service (economics), services, or goods such as clothing, toys, food, or vehicles. A donati ...
or outsourcing the association's
digital media Digital media means any communication media that operate with the use of any of various encoded machine-readable data Machine-readable data, or computer-readable data, is data Data (; ) are individual facts, statistics, or items of informa ...
outlets.


Business revenue

Business revenue is money income from activities that are ordinary for a particular corporation, company, partnership, or sole-proprietorship. For some businesses, such as
manufacturing Manufacturing is the creation or Production (economics), production of goods with the help of equipment, Work (human activity), labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector ...
or
grocery A grocery store (North America), grocery or grocery shop (UK) is a store that primarily retails a general range of food products, which may be fresh Fresh or FRESH may refer to: People *DJ Fresh Daniel Edward Stein (born 11 April 197 ...

grocery
, most revenue is from the sale of goods. Service businesses such as
law firm A law firm is a business entity formed by one or more lawyers A lawyer or attorney is a person who practices law, as an advocate, attorney at lawAttorney at law or attorney-at-law, usually abbreviated in everyday speech to attorney, is the ...
s and
barber shops
barber shops
receive most of their revenue from rendering services. Lending businesses such as
car rental A car rental, hire car, or car hire agency is a company that rents automobile A car (or automobile) is a wheeled motor vehicle Electric bicycles parked in Yangzhou's main street, Wenchang Lu. They are a very common way of transport in t ...
s and
bank A bank is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), stat ...

bank
s receive most of their revenue from fees and interest generated by lending
asset In financial accounting Financial accounting is the field of accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such a ...
s to other organizations or individuals. Revenues from a business's primary activities are reported as sales, sales revenue or
net sales Net or net may refer to: Mathematics and physics * Net (mathematics) In mathematics Mathematics (from Greek: ) includes the study of such topics as numbers ( and ), formulas and related structures (), shapes and spaces in which they ...
. This includes product returns and discounts for early payment of
invoice :''See also Voucher: an invoice is within the European union primarily legally defined by the EU VAT directive as an accounting voucher (to verify tax and VAT reporting) and secondly as a Civil law (common law) document. An invoice, bill or tab is ...

invoice
s. Most businesses also have revenue that is incidental to the business's primary activities, such as interest earned on deposits in a
demand account A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is available to the a ...
. This is included in revenue but not included in net sales. Sales revenue does not include
sales tax A sales tax is a tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity In law Law is a system A system is a group of Interaction, interacting or interrelate ...
collected by the business. Other revenue (a.k.a. non-operating revenue) is revenue from peripheral (non-core) operations. For example, a company that manufactures and sells automobiles would record the revenue from the sale of an automobile as "regular" revenue. If that same company also rented a portion of one of its buildings, it would record that revenue as “other revenue” and disclose it separately on its income statement to show that it is from something other than its core operations. The combination of all the revenue-generating systems of a business is called its
revenue modelA revenue model is a framework for generating financial income. It identifies which revenue In accounting, revenue is the income or increase in net assets that an entity has from its normal activities (in the case of a business, usually from the sal ...
.


Accounting terms

:
Net sales Net or net may refer to: Mathematics and physics * Net (mathematics) In mathematics Mathematics (from Greek: ) includes the study of such topics as numbers ( and ), formulas and related structures (), shapes and spaces in which they ...
=
gross sales In bookkeeping, accounting Accounting or Accountancy is the measurement, processing, and communication of financial and non financial information about economic entity, economic entities such as businesses and corporations. Accounting, which h ...
– (customer discounts, returns, and allowances) :
Gross profit For households and individuals, gross income is the sum of all wages A wage is the distribution from an employer Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work ...
=
net sales Net or net may refer to: Mathematics and physics * Net (mathematics) In mathematics Mathematics (from Greek: ) includes the study of such topics as numbers ( and ), formulas and related structures (), shapes and spaces in which they ...
cost of goods sold Cost of goods sold (COGS) is the carrying value In accounting, book value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization ...
:
Operating profit In accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compar ...
=
gross profit For households and individuals, gross income is the sum of all wages A wage is the distribution from an employer Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work ...
– total
operating expense An operating expense, operating expenditure, operational expense, operational expenditure or opex is an ongoing cost for running a product, business, or system . Its counterpart, a capital expenditure Capital expenditure or capital expense (cap ...
s :
Net profit In business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a busin ...
=
operating profit In accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes of an object or event, which can be used to compar ...
– taxes – interest :
Net profit In business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a busin ...
=
net sales Net or net may refer to: Mathematics and physics * Net (mathematics) In mathematics Mathematics (from Greek: ) includes the study of such topics as numbers ( and ), formulas and related structures (), shapes and spaces in which they ...
cost of goods sold Cost of goods sold (COGS) is the carrying value In accounting, book value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization ...
operating expense An operating expense, operating expenditure, operational expense, operational expenditure or opex is an ongoing cost for running a product, business, or system . Its counterpart, a capital expenditure Capital expenditure or capital expense (cap ...
– taxes – interest


Financial statement analysis

Revenue is a crucial part of financial statement analysis. The company's performance is measured to the extent to which its asset inflows (revenues) compare with its asset outflows (
expenses Expenditure is an outflow of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corner">174x174px Money is any item or ve ...
).
Net income In business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a busin ...
is the result of this equation, but revenue typically enjoys equal attention during a standard
earnings call An earnings call is a teleconference, or webcast, in which a public company discusses the financial results of a reporting period ("earnings guidance"). The name comes from earnings per share (EPS), the bottom line number in the income statement di ...
. If a company displays solid “top-line growth”, analysts could view the period's performance as positive even if earnings growth, or “bottom-line growth” is stagnant. Conversely, high net income growth would be tainted if a company failed to produce significant revenue growth. Consistent revenue growth, if accompanied by net income growth, contributes to the value of an enterprise and therefore the
stock In finance, stock (also capital stock) consists of all of the shares In financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities i ...

stock
price. Revenue is used as an indication of earnings quality. There are several
financial ratios A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial ...
attached to it: *The most important being
gross margin Gross margin is the difference between revenue In accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes ...
and
profit margin Profit margin, net margin, net profit margin or net profit ratio is a measure of profitability An economic profit is the difference between the revenue a commerce , commercial entity has received from its outputs and the opportunity costs of its ...
; also, companies use revenue to determine bad debt expense using the income statement method. *Price / Sales is sometimes used as a substitute for a Price to earnings ratio when earnings are negative and the P/E is meaningless. Though a company may have negative earnings, it almost always has positive revenue. *
Gross Margin Gross margin is the difference between revenue In accounting Accounting or Accountancy is the measurement ' Measurement is the number, numerical quantification (science), quantification of the variable and attribute (research), attributes ...
is a calculation of revenue less
cost of goods sold Cost of goods sold (COGS) is the carrying value In accounting, book value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization ...
, and is used to determine how well sales cover direct variable costs relating to the production of goods. *Net income/sales, or
profit margin Profit margin, net margin, net profit margin or net profit ratio is a measure of profitability An economic profit is the difference between the revenue a commerce , commercial entity has received from its outputs and the opportunity costs of its ...
, is calculated by investors to determine how efficiently a company turns revenues into profits.


Government revenue

Government revenue includes all amounts of money (i.e., taxes and fees) received from sources outside the government entity. Large governments usually have an
agency Agency may refer to: * a governmental or other institution Institutions, according to Samuel P. Huntington, are "stable, valued, recurring patterns of behavior". Institutions can refer to mechanisms which govern the behavior Behavior (Am ...
or
department Department may refer to: * Departmentalization, division of a larger organization into parts with specific responsibility Government and military *Department (country subdivision), a geographical and administrative division within a country, for e ...
responsible for collecting government revenue from companies and individuals.HM Revenue & Customs (United Kingdom)Office of the Revenue Commissioners (Ireland)
[http://dor.mo.gov/ Missouri Department of Revenue
Louisiana Department of Revenue
Government revenue may also include reserve bank currency which is printed. This is recorded as an advance to the retail bank together with a corresponding currency in circulation expense entry, that is, the income derived from the Official Cash rate payable by the retail banks for instruments such as 90-day bills. There is a question as to whether using generic business-based accounting standards can give a fair and accurate picture of government accounts, in that with a monetary policy statement to the reserve bank directing a positive inflation rate, the expense provision for the return of currency to the reserve bank is largely symbolic, such that to totally cancel the currency in circulation provision, all currency would have to be returned to the reserve bank and canceled.


See also

*
List of companies by revenue This list comprises the world's largest companies by Consolidation (business), consolidated 2020 revenue, according to the Fortune Global 500, ''Fortune'' Global 500 latest tally published on August 10, 2020. American retail corporation Walmart has ...
* Legal tender#Demonetization


References

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