Revenue

Revenue is the total amount earned by a business from its ordinary activities during a specific period. It represents the inflow of economic benefits from delivering goods or performing services, and may include consideration from customers as well as receipts from other sources such as royalties, rents, or interest.

Revenue is not the same as profit. Profit equals revenue minus expenses, taxes, and other costs. Under accrual accounting, revenue is recognized when the entity has satisfied its performance obligations and control of the goods or services is transferred, not necessarily when cash is received.

Types of revenue: Operating revenue arises from core business activities, such as sales of goods or fees for services. Non-operating revenue comes from ancillary activities, such as interest income, dividends, rents, or royalties. Revenue may be recurring (for example, subscriptions) or non-recurring (one-time gains).

Accounting guidance: International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP) provide criteria for revenue recognition that emphasize contract terms, transfer of control, and the measurement of consideration. Companies disclose revenue by product line or segment where relevant.

Measurement and presentation: Revenue is typically recorded at the fair value of consideration expected to be received, with adjustments for refunds, allowances, and rebates. It is usually presented as the top line on the income statement and is a key metric for assessing a company’s size, growth, and performance.