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Revenue Definition

Revenue is defined as gross income received by an entity from its normal business activities before any expenses have been deducted. Income may be received as cash or some equivalent form and is typically generated from the sale of goods or the rendering of services for a period.

Revenue Definition according to Wikipedia:

In accounting, revenue is the income that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. Some companies receive revenue from interest, royalties, or other fees. Source: Wikipedia

A little deep dive into Revenue

The whole objective of business is to earn profit from the sales of products. We could sell both goods and services. Profit equals to gross sales of these products minus the cost of the activities required to generate those sales (expenses). Thus, in simple words, a business generates revenue when it exchanges its goods and services with their customers and receives money against it. Now, if the revenue is greater than expenses that the firm incurs while generating that goods and services, then the business makes a profit, otherwise loss. There are different names for revenue like topline, turnover, sales etc.

Types of ‘Revenue’

Sale of goods -For the manufacturers, retailers and wholesalers generate revenue by selling their goods.

Service Provider - Service providers don't sell goods such as accounting firms, doctors and lawyers generate most of their revenue from providing services.

Lending fees and investments– Financial Institution generates revenue by lending assets or money to their customers and earn interest against it. Investment firms get revenue from dividends paid to them by other companies based on their shareholdings.

Other - Non-profit organizations will get revenue from governments, donations from corporate houses, income from fundraising activities.

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