What is Revenue?
Revenue is defined as the income generated through a business’ primary operations. It is often referred to as “top line” and is shown at the top of an income statement.Alternate names: Income, Gross Sales
How to calculate Revenue
If a customer signs an annual contract for $12,000 consisting of monthly payments, then the revenue for each month of that year is $1,000, and the revenue for that year is $12,000.
More about this metric
Revenue is the income generated from primary business operations and activities such as product sales, rent, interest, or other income. Costs such as COGS and other expenses are not deducted from revenue. Revenue is referred to as a “top line” figure and is shown at the top of the income statement. Costs and expenses are deducted from revenue to obtain net income.
Tracking revenue can give businesses an idea of the amount of money being generated across different revenue streams, which can help growth by highlighting the best and worst performing parts of the business.
There are multiple ways of recognizing revenue, based on the accounting method used by the business. A business can either recognize revenue when payment is received, or when the business has received sales on credit. It is important to note that while all sales can be considered revenue, revenue can consist of income sources other than sales, such as non-operating revenue.
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