What is Revenue?

Revenue is what you sell. Think about it as s the money that you get for selling a product (e.g. books) or services (e.g. hairdressing) to another person or business.

For example, if a retail company sells you a toaster for $50, that’s $50 of revenue for the retailer.

Revenue is measured before costs.

For example, if it cost $10 to buy the toaster, the retailer’s revenue is still $50 – not $40. It’s recorded before costs.

International Accounting Standard 18 – Revenue deals with how companies record revenue in their financial statements.

You can find revenue on a company’s Income Statement. 

Revenue is recorded when:

  • The amount of money can be reliably measured
  • The seller is more likely than not to receive the money
  • The costs incurred can be measured reliably

Is Profit Different to Revenue?

Revenue is the first thing you see on a financial statement (it’s at the top of the Income Statement), and it’s the first thing a company receives from a sale. Meaning, it’s before costs.

Profit is also found on the Income Statement, but it’s found down the bottomafter costs, expenses and taxes have been deducted.

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