Income Revenue Or Expense

Remember not all money you receive is revenue.

Income revenue or expense. Revenue is the total amount of income generated by the sale of goods or services while income is earnings or profit revenue minus expenses. Revenue is money your business receives from its normal business activities. Expenses are costs of doing the business as all businesses have to make payments for a number of benefits and services they receive. The accrual method of accounting requires you to show expenses in the period that the expense is incurred rather than in the period that the expense is paid.

For individuals however income generally refers to the total wages salaries tips rents interest or dividend received for a specific time period. Learn more in cfi s free accounting courses. In other words expenses are incurred when the assets of a business are used to acquire goods and services which are needed by a business to produce revenue. Non accountants might use the term income instead of the word revenue.

When income is represented as a percentage of revenue it s called profit margin. Is the sales amount a company earns from providing services or selling products the top line. Sometimes revenue is referred to as turnover. Generally accountants use the term income to mean net of revenues and expenses for example a retailer s income from operations is its net sales minus the cost of goods sold minus its selling general and administrative expenses.

Income can sometimes be used to mean revenue or it can also be used to refer to net income which is revenue less operating expenses the bottom line. When the old man with a top hat comes in each morning and hands over 5 for his slice of cream cake that 5 is considered to be revenue.