What is Revenue? 

Revenue is what you sell. It is the money that you get for selling a product (e.g. books) or services (e.g. hairdressing) to another person or business.

For example, if a retail company sells you a toaster for $50, that’s $50 of revenue for the retailer.

Revenue is measured before costs.

For example, if it cost $10 to buy the toaster, the retailer’s revenue is still $50 – not $40. It’s recorded before costs.

International Accounting Standard 18 – Revenue deals with how companies record revenue in their financial statements.

You can find revenue on a company’s Income Statement. 

Revenue is recorded when:

  • The amount of money can be reliably measured
  • The seller is more likely than not to receive the money
  • The costs incurred can be measured reliably

Is Profit Different to Revenue?

Revenue is the first thing you see on a financial statement (it’s at the top of the Income Statement), and it’s the first thing a company receives from a sale. Meaning, it’s before costs.

Profit is also found on the Income Statement, but it’s found down the bottomafter costs, expenses and taxes have been deducted.

Was this post helpful?
Let us know if you liked the post. That’s the only way we can improve.
Yes0
No0
Powered by Devhats