Revenue

Definition

Revenue is the total amount of money generated from the sale of goods or services before any expenses are deducted. It is often referred to as the top line because it sits at the top of a company's income statement.

5 Must Know Facts For Your Next Test

1. Revenue is recorded when earned under accrual accounting, regardless of when cash is received.
2. In cash accounting, revenue is only recorded when actual payment is received.
3. Revenue can be broken down into operating revenue (from core business activities) and non-operating revenue (from secondary sources).
4. The calculation of revenue involves multiplying the price at which goods or services are sold by the number of units sold.
5. Net revenue accounts for returns, allowances, and discounts given to customers.

Review Questions

• How does accrual accounting treat the recording of revenue differently than cash accounting?
• What distinguishes operating revenue from non-operating revenue?
• Why might net revenue differ from gross revenue?

Related terms

Gross Profit:

The difference between revenue and cost of goods sold.

Net Income:

The amount of profit remaining after all expenses, including taxes and interest, have been deducted from total revenue.

Deferred Revenue:

Money received by a company for goods or services yet to be delivered or performed.