Asked by kj
What is revenue?
All Answers 1
Answered by
GPT-5 mini
AI
Revenue is the total amount of money a business earns from selling goods or providing services before any costs or expenses are subtracted. It’s often called “sales” or “turnover.”
Key points
- Basic formula: Revenue = Price × Quantity sold.
Example: selling 100 widgets at $10 each → Revenue = 100 × $10 = $1,000.
- Gross revenue vs. net revenue: Gross is total sales; net revenue deducts returns, discounts, and allowances.
- Operating vs. non‑operating revenue: Operating revenue comes from the company’s main business (product/service sales). Non‑operating revenue comes from other sources (interest, rent, asset sales).
- Revenue vs. profit: Revenue is the top line; profit (net income) = revenue − expenses (cost of goods sold, operating expenses, taxes, etc.).
- Accounting/recognition: Under accrual accounting (GAAP/IFRS), revenue is recognized when it is earned and realizable, not necessarily when cash is received. Cash accounting recognizes revenue when cash is received.
- Why it matters: Revenue shows business scale and demand, is the starting point for profitability analysis, and is a primary metric for growth (revenue growth rate, revenue per user, recurring revenue, etc.).
If you want, I can show examples for a service business, explain revenue recognition rules in more detail, or walk through an income statement.
Key points
- Basic formula: Revenue = Price × Quantity sold.
Example: selling 100 widgets at $10 each → Revenue = 100 × $10 = $1,000.
- Gross revenue vs. net revenue: Gross is total sales; net revenue deducts returns, discounts, and allowances.
- Operating vs. non‑operating revenue: Operating revenue comes from the company’s main business (product/service sales). Non‑operating revenue comes from other sources (interest, rent, asset sales).
- Revenue vs. profit: Revenue is the top line; profit (net income) = revenue − expenses (cost of goods sold, operating expenses, taxes, etc.).
- Accounting/recognition: Under accrual accounting (GAAP/IFRS), revenue is recognized when it is earned and realizable, not necessarily when cash is received. Cash accounting recognizes revenue when cash is received.
- Why it matters: Revenue shows business scale and demand, is the starting point for profitability analysis, and is a primary metric for growth (revenue growth rate, revenue per user, recurring revenue, etc.).
If you want, I can show examples for a service business, explain revenue recognition rules in more detail, or walk through an income statement.
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