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What is revenue?

Revenue means the money a business receives from the sale of goods and services to clients and customers, as well as income from royalties and interest.

In accountancy, revenue is related to a specific period, such as a year, quarter or month.

Any increase in owner’s equity over a given period, before expenses are subtracted, is also considered as revenue.

According to ft.com/lexicon, revenue is:

“Money received during a particular period. In the sense of a company receiving payment for its goods or services, same as sales or turnover.”

Luigi Bakery RevenueLuigi’s Bakery posted strong revenues in the first quarter.

In businesses, the following are examples of revenue:

  • The sale of goods – as occurs in manufacturing or the retail business.
  • Fees for services – as in a hairdresser or law firm.
  • Fees and interest income from lending assets – as in car rental companies and banks.
  • Growth from investments – e.g. interest bearing deposit accounts and stocks and shares that were purchased.


 

For a government, revenue is the money it collects from: taxes, licenses, fees, fines, and reserve bank currency which is printed.

Revenue is sometimes referred to as sales or turnover.

For non-profit organizations, such as charities and churches, the term ‘gross receipts’ is commonly used instead of revenue.

Gross receipts include money received from donations from companies or individuals, grants and other awards from government agencies, income from activities related to the organization’s mission, fundraising, membership fees, and growth from financial investments including stocks and shares.

What is the difference between revenue and income?

There are two main types of income:

  • Gross income – this is usually the same as revenue (or gross revenue).
  • Net income (profit) – this is revenue minus business expenses.

Put simply, net income is a company’s profits – the amount of money the business has left over, if any, after paying the costs of doing business, such as raw materials, interest on loans, wages, rent, utilities, etc.

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