REVENUE definition in the Cambridge English Dictionary

For example, if a contractor takes payment for a bathroom renovation before the renovation is completed, that would be an example of unearned income. It is typically reported as a liability on the company’s financial statements because it is essentially a debt owed to a customer. At the same time that these sales are recorded as revenue in a company’s financial statements, the money owed (if it’s not received yet) is listed on the balance sheet as accounts receivable. When the balance due is paid, revenue stays the same, but accounts receivable goes down and cash goes up.

Most revenue comes from sales – the proceeds of which are needed in order to cover the general operating expenses such as salaries, inventory, rent, and other daily and longer term expenses. Any income that a company receives falls into the definition of revenue and can be divided into two main categories – operating revenue and non-operating revenue. For tax reasons, business income is categorized as regular income and is a type of earned income. It includes all earnings derived from an entity’s activities. It is a company’s net profit or loss, which is determined by subtracting all of its revenue from all sources from all of its operating expenses. Revenues from a business’s primary activities are reported as sales, sales revenue or net sales. This includes product returns and discounts for early payment of invoices.

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There are several deductions that may be taken from revenues, such as sales returns and sales allowances, which can be used to arrive at the net sales figure. Sales taxes are not included in revenue, since they are collected on behalf of the government by the seller. Revenue for federal and local governments would likely be in the form of tax receipts from property or income taxes. Governments might also earn revenue from the sale of an asset or interest income from a bond.

You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. Revenue, often referred to as sales or the top line, is the money received from normal business operations. In a retail environment, revenue is the money earned from the sale of goods. This refers both to sales that are made in a brick and mortar store as well as online. In addition to giving customers what they want, Pay.com also gives you a personalized dashboard where you can keep track of all of your sales and revenue. While the term “income” is often used interchangeably with “revenue,” it is very important to differentiate between income and profit .

Deductions from Revenue

The company, with around $15 million in revenue, is also running at a loss today. Subscription revenues were $1.12 billion, down 19 percent from 2012.

• Improve your vocabulary with English Vocabulary in Use from Cambridge.
• Revenue is the money generated from normal business operations, calculated as the average sales price times the number of units sold.
• For example, Apple products include iPad, Apple Watch, and Apple TV. Alternatively, Apple may be interested in separately analyzing its Apple Music, Apple TV+, or iCloud services.
• There are a few other exceptions where capital gains may be taxed at rates greater than 20%, like personal homes and investments in real estate, stocks, bonds, and other financial products.

Revenue from Sale of an Asset – if the company has a piece of equipment or other asset that is no longer necessary and they sell it, the price paid to them is considered revenue. This is usually a one-off event and since it’s not part of the core business it is not considered the same as regular https://business-accounting.net/ sales revenue. Revenue and revenue growth are also used in more advanced types of financial analyses, such as financial modeling and discounted cash flow valuation. Companies get revenue in many different ways, but the most straightforward one to understand is the sales of products or services.

British Dictionary definitions for revenue

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However, turnover could also refer to business activities that do not generate sales income, such as employee turnover. If the revenues earned are a main activity of the business, they are considered to be operating revenues. If the revenues come from a secondary activity, they are considered to be nonoperating revenues. For example, interest earned by a manufacturer on its investments is a nonoperating revenue.

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 revenues definition and meaning growth, contributes to the value of an enterprise and therefore the share price. Whereas, cash account only count sales as revenues when the payment is received.

Due to the complexity of the variables that are involved in this process, it’s wise to consult with an experienced accountant. These two terms are used to report different accumulations of numbers. Revenue may also be referred to as sales and is used in the price-to-sales (P/S) ratio—an alternative to the price-to-earnings (P/E) ratiothat uses revenue in the denominator. Non-operating income is infrequent or nonrecurring income derived from secondary sources (e.g., lawsuit proceeds). Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.

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