What does revenue include

These costs and expenses include overhead, commissions, cost of production, taxes, wages, freight, etc. Net revenue is the revenue earned after subtracting the costs and expenses incurred to earn it directly related selling expense.

A revenue model is a conceptual structure that states and explains the revenue earning strategy of the business. Even though many use revenue and income interchangeably in the business world, there is a big difference between the two. Income refers to earnings from all the sources combined. Revenue is a subset of income which includes earnings only from the primary operations of the business.

Sales are a subset of revenue and can be defined as the economic price paid by the customers for a product or service offered by the business. While sales are a source of revenue, a company may include other revenue sources like interest on loans, rent on the property, etc. Sales usually are less than or equal to the revenue but in cases where there are returns and discounts involved, the sales can be more than the actual revenue earned.

The revenue account is an equity account with a credit balance. This means that a credit in the revenue T-account increases the account balance. As shown in the expanded accounting equation , revenues increase equity.

Unlike other accounts, revenue accounts are rarely debited because revenues or income are usually only generated. Income is rarely taken away from a company. The revenue account is only debited if goods are returned and sales are refunded. In this case, the recorded sale must be reversed because the original sale is canceled. There are many different kinds of revenue accounts, but they all represent the same basic concepts: a company receives cash or a claim to cash for the sale or use of its assets.

Revenues are typically separated into two different categories: operating revenues and non-operating revenues or other income. Your Practice. Popular Courses. Part Of. Accounting Basics. Accounting Theories and Concepts. Accounting Methods: Accrual vs. Accounting Oversight and Regulations. Corporate Accounting. Public Accounting: Financial Audit and Taxation.

Accounting Systems and Record Keeping. Accounting for Inventory. What Is Revenue? Key Takeaways Revenue, often referred to as sales or the top line, is the money received from normal business operations. Operating income is revenue from the sale of goods or services less operating expenses.

Non-operating income is infrequent or nonrecurring income derived from secondary sources e. How Does One Generate Revenue? What Is Accrued and Deferred Revenue? Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Operating Income Definition Operating income looks at profit after deducting operating expenses such as wages, depreciation, and cost of goods sold.

Income From Operations IFO Income from operations is a company's earnings before factoring of interest, taxes and the sales or purchases or any assets. Operating Profit Definition Operating profit is the total earnings from a company's core business operations, excluding deductions of interest and tax. Income Statement An income statement is one of the three major financial statements that reports a company's financial performance over a specific accounting period.

Earnings Before Interest and Taxes EBIT Definition Earnings before interest and taxes is an indicator of a company's profitability and is calculated as revenue minus expenses, excluding taxes and interest. Cash Flow Definition Cash flow is the net amount of cash and cash equivalents being transferred into and out of a business.

Partner Links. Related Articles. Financial Analysis How do operating income and revenue differ? Tools for Fundamental Analysis Revenue vs. Sales: What's the Difference? Financial Statements Gross Profit vs. Net Income: What's the Difference? Investopedia is part of the Dotdash publishing family.