What does revenue mean in accounting

Definition: Revenue, also called a sale, is an increase in equity related to the sale of a product or service that earned income. In other words, revenue is income earned by the company from its business activities. There are many different types of revenues including product sales, consulting fees and other services, rent, and even commission based fees.

Revenue is known as the top line because it appears first on a company's income statement. Net income, also known as the bottom line, is revenues minus expenses.

There is a profit when revenues exceed expenses. Investors often consider a company's revenue and net income separately to determine the health of a business. Net income can grow while revenues remain stagnant because of cost-cutting. Such a situation does not bode well for a company's long-term growth. When public companies report their quarterly earnings , two figures that receive a lot of attention are revenues and EPS. A company beating or missing analysts' revenue and earnings per share expectations can often move a stock's price.

A company's revenue may be subdivided according to the divisions that generate it. For example, a recreational vehicles department might have a financing division, which could be a separate source of revenue. Revenue can also be divided into operating revenue —sales from a company's core business—and non-operating revenue which is derived from secondary sources. As these non-operating revenue sources are often unpredictable or nonrecurring, they can be referred to as one-time events or gains.

For example, proceeds from the sale of an asset, a windfall from investments, or money awarded through litigation are non-operating revenue.

In the case of government, revenue is the money received from taxation, fees, fines, inter-governmental grants or transfers, securities sales, mineral or resource rights, as well as any sales made. For non-profits, revenues are its gross receipts. Its components include donations from individuals, foundations, and companies; grants from government entities; investments; fundraising activities; and membership fees. In terms of real estate investments, revenue refers to the income generated by a property, such as rent or parking fees.

When the operating expenses incurred in running the property are subtracted from property income, the resulting value is net operating income NOI. Revenue is the money a company earns from the sale of its products and services.

Cash flow is the net amount of cash being transferred into and out of a company. Revenue provides a measure of the effectiveness of a company's sales and marketing, whereas cash flow is more of a liquidity indicator. Both revenue and cash flow should be analyzed together for a comprehensive review of a company's financial health. For many companies, revenues are generated from the sales of products or services.

For this reason, revenue is sometimes known as gross sales. Revenue can also be earned via other sources. Inventors or entertainers may receive revenue from licensing, patents, or royalties. Find salaries. Upload your resume. Sign in. Career Development.

What is revenue? How revenue is classified. Gross revenue. Net revenue. How does revenue work? Calculating revenue. Balance sheet. Types of revenue. Operating revenues. Non-operating revenues. Examples of revenue. Revenue recognition methods. Completed contract method. Cost recovery method. Installment method. Percentage of completion method.

Sales-basis method. Just as revenue is the top line, net income is the bottom line or the "bottom" figure on a company's income statement. Apple Inc. We can see that Apple's net income is smaller than its total revenue since net income is the result of total revenue minus all of Apple's expenses for the period.

The example above shows how different income is from revenue when referring to a company's financials. Bottom line growth and revenue growth can be achieved in various ways.

A company like Apple might experience top-line growth due to a new product launch like the new iPhone , a new service, or a new advertising campaign that leads to increased sales. Bottom-line growth might have occurred from the increase in revenues, but also from cutting expenses or finding a cheaper supplier. Accessed Mar. Financial Analysis.

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