Revenue

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For other uses, see Revenue (disambiguation). Revenue_sentence_0

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 sale of goods and services to customers). Revenue_sentence_1

Commercial revenue may also be referred to as sales or as turnover. Revenue_sentence_2

Some companies receive revenue from interest, royalties, or other fees. Revenue_sentence_3

"Revenue" may refer to income in general, or it may refer to the amount, in a monetary unit, earned during a period of time, as in "Last year, Company X had revenue of $42 million". Revenue_sentence_4

Profits or net income generally imply total revenue minus total expenses in a given period. Revenue_sentence_5

In accounting, 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 at the very top. Revenue_sentence_6

This is to be contrasted with the "bottom line" which denotes net income (gross revenues minus total expenses). Revenue_sentence_7

In general usage, revenue is income received by an organization in the form of cash or cash equivalents. Revenue_sentence_8

Sales revenue is income received from selling goods or services over a period of time. Revenue_sentence_9

Tax revenue is income that a government receives from taxpayers. Revenue_sentence_10

Fundraising revenue is income received by a charity from donors etc. to further its social purposes. Revenue_sentence_11

In more formal usage, revenue is a calculation or estimation of periodic income based on a particular standard accounting practice or the rules established by a government or government agency. Revenue_sentence_12

Two common accounting methods, cash basis accounting and accrual basis accounting, do not use the same process for measuring revenue. Revenue_sentence_13

Corporations that offer shares for sale to the public are usually required by law to report revenue based on generally accepted accounting principles or on International Financial Reporting Standards. Revenue_sentence_14

In a double-entry bookkeeping system, revenue accounts are general ledger accounts that are summarized periodically under the heading "Revenue" or "Revenues" on an income statement. Revenue_sentence_15

Revenue account-names describe the type of revenue, such as "Repair service revenue", "Rent revenue earned" or "Sales". Revenue_sentence_16

Non-profit organizations Revenue_section_0

For non-profit organizations, revenue may be referred to as gross receipts, support, contributions, etc. Revenue_sentence_17

This operating revenue can include donations from individuals and corporations, support from government agencies, income from activities related to the organization's mission, income from fundraising activities, and membership dues. Revenue_sentence_18

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). Revenue_sentence_19

Association dues revenue Revenue_section_1

For non-profits with substantial revenue from dues of its voluntary members: non-dues revenue is revenue generated through means besides association membership fees. Revenue_sentence_20

This revenue can be found through means of sponsorships, donations or outsourcing the association's digital media outlets. Revenue_sentence_21

Business revenue Revenue_section_2

Business revenue is money income from activities that is ordinary for a particular corporation, company, partnership, or sole-proprietorship. Revenue_sentence_22

For some businesses, such as manufacturing or grocery, most revenue is from the sale of goods. Revenue_sentence_23

Service businesses such as law firms and barber shops receive most of their revenue from rendering services. Revenue_sentence_24

Lending businesses such as car rentals and banks receive most of their revenue from fees and interest generated by lending assets to other organizations or individuals. Revenue_sentence_25

Revenues from a business's primary activities are reported as sales, sales revenue or net sales. Revenue_sentence_26

This includes product returns and discounts for early payment of invoices. Revenue_sentence_27

Most businesses also have revenue that is incidental to the business's primary activities, such as interest earned on deposits in a demand account. Revenue_sentence_28

This is included in revenue but not included in net sales. Revenue_sentence_29

Sales revenue does not include sales tax collected by the business. Revenue_sentence_30

Other revenue (a.k.a. non-operating revenue) is revenue from peripheral (non-core) operations. Revenue_sentence_31

For example, a company that manufactures and sells automobiles would record the revenue from the sale of an automobile as "regular" revenue. Revenue_sentence_32

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. Revenue_sentence_33

The combination of all the revenue generating systems of a business is called its revenue model. Revenue_sentence_34

Accounting terms Revenue_section_3

Revenue_description_list_0

Financial statement analysis Revenue_section_4

Main article: Financial statement analysis Revenue_sentence_35

Revenue is a crucial part of financial statement analysis. Revenue_sentence_36

The company’s performance is measured to the extent to which its asset inflows (revenues) compare with its asset outflows (expenses). Revenue_sentence_37

Net income is the result of this equation, but revenue typically enjoys equal attention during a standard earnings call. Revenue_sentence_38

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. Revenue_sentence_39

Conversely, high net income growth would be tainted if a company failed to produce significant revenue growth. Revenue_sentence_40

Consistent revenue growth, if accompanied by net income growth, contributes to the value of an enterprise and therefore the stock price. Revenue_sentence_41

Revenue is used as an indication of earnings quality. Revenue_sentence_42

There are several financial ratios attached to it: Revenue_sentence_43

Revenue_unordered_list_1

  • The most important being gross margin and profit margin; also, companies use revenue to determine bad debt expense using the income statement method.Revenue_item_1_5
  • 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.Revenue_item_1_6
  • Gross Margin is a calculation of revenue less cost of goods sold, and is used to determine how well sales cover direct variable costs relating to the production of goods.Revenue_item_1_7
  • Net income/sales, or profit margin, is calculated by investors to determine how efficiently a company turns revenues into profits.Revenue_item_1_8

Government revenue Revenue_section_5

Main article: Government revenue Revenue_sentence_44

Government revenue includes all amounts of money (i.e., taxes and fees) received from sources outside the government entity. Revenue_sentence_45

Large governments usually have an agency or department responsible for collecting government revenue from companies and individuals. Revenue_sentence_46

Government revenue may also include reserve bank currency which is printed. Revenue_sentence_47

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. Revenue_sentence_48

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 cancelled. Revenue_sentence_49

See also Revenue_section_6

Revenue_unordered_list_2


Credits to the contents of this page go to the authors of the corresponding Wikipedia page: en.wikipedia.org/wiki/Revenue.