Category:Financial analysis
Alternative names: sales turnover gross income

What is Revenue

Revenue is the gross income generated from normal business activities usually from the sale of goods and services to customers. It is the top line number on a company Income Statement from which all the costs are subtracted to calculate net income.

How is revenue recorded

In accounting (revenue recognition principle) revenues are recorded when income is earned not necessarily when the cash is collected from the sale. When the company sells its products on credit, the sale is immediately recorded as revenue, but since cash has not been received yet, the amount is recorded on the balance sheet as accounts receivable. When cash payment is finally received later, there is no additional income recorded, but the cash balance goes up, and accounts receivable goes down.

Related terms