R Is for Revenue
By lperry at 8 July, 2010, 12:00 am
I like revenues. Who doesn’t? It only means that you have some profit from your business. On a larger scale, you can have more than enough for your needs and enough for your wants. Is it completely different from income? What’s the relationship between revenues and e-commerce or outsourcing?
Definition of Revenue
There are many people who believe that revenues and income are one and the same. They aren’t. However, they are basically similar in a lot of ways. Revenue, which is also referred to by others as gross income, refers to the money a company earns in providing a service or selling goods to their customers. It may also include investment gains. nnIn the strictest sense, revenue is cash or cash equivalent that is earned by a company. It can be from the sale of a product or a service. A unique kind of revenue is the tax revenue. This is the money collected by the government from the taxpayers. The amount collected will be used to improve the living conditions and welfare of all citizens.
Lessons on Business Revenue
Let’s not try to complicate things. Business revenue is basically the amount collected by the business due to sales or purchases from their customers. This simple explanation is considered to be one of the lifeblood of business. If you don’t have it, all your assets will slowly start to diminish until all that’s left are debts that you wish you know how to pay.
Revenues may differ depending on the type of business. For those who are into manufacturing and production, revenues could be from the sale of their goods. Those who are in the service business such as doctors, lawyers, engineers, accountants, and management consultants, to name a few, revenues come from every completed service. For those who are in the lending industry, revenues are in the likes of interest payments and fees collected. A corporation can also obtain revenues in the forms of dividends, which shall then be given out to the company’s shareholders.
Revenue Recognition
The principle of revenue recognition is one of the most essential lessons you can learn in accounting. It will teach you the difference between accrual and cash basis accounting. In the former, revenues are considered realized regardless of when the money is received. On the other hand, in cash basis accounting, revenue is only realized once the cash has been received.
Lawrence Perry is the CEO of Catch Friday Enterprises, providing virtual assistants around the world, and runs a PR agency in London, England. http://quick.catchfriday.com/
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