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Revenue is a term primarily used in the United States to describe the amount of money a company generates in a set period of time through the sale of products and/or services. Revenue is calculated before any expenses are deducted, with the reporting of revenue varying from business to business. Revenue can be ‘recognized’ or ‘received’ in different ways. Revenue can be legally recognized when products/services are exchanged for cash or other assets, or when a claim to cash or asset is made (such as a signed contract). The rules specifying when the recognition of revenue should occur are based on various accounting methods, including cash basis accounting and accrual basis accounting. Businesses often break revenue down by operating segment, department, geographic location and/or product/service line, among others. In government, revenue is derived from taxes, liens, licenses and other fees. Non-profit organizations broaden revenue classification to include donations, grants and barters. Another name for revenue is “top line” because of its prominent position at the top of an income statement. Often the terms sales and revenue are used interchangeably. |
