What Is Revenue? - Definition & Concept

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  • 0:01 What Is Revenue?
  • 0:46 Revenue & Income
  • 1:12 Examples of Revenue
  • 2:36 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Revenue is essential for nearly every type of business. In this lesson, you'll learn what revenue is, what it's not, and how it fits into the overall income of a business. You'll also have a chance to reinforce your knowledge with a short quiz.

What Is Revenue?

Revenue is a form of income that is earned by the sale of goods or services. Gross revenue is the revenue earned without subtracting costs and expenses related to the revenue, such as overhead, wages, commissions, costs of production, and taxes. Net revenue is the income left over after you have paid all the costs and expenses related to earning the revenue. Revenue is reported on your income statement.

Revenue is not the equivalent of profit. If the costs of generating the revenue exceed the income earned from the sales, then you have lost money instead of making money. Consequently, your income statement can reflect a loss even if you made millions of dollars of revenue.

Revenue and Income

All revenue is income, but not all income is from revenue. Income can be thought of as an increase in wealth from any source. Some examples of income include:

  • Sales revenue
  • Wage income
  • Salary income
  • Investment income, such as distribution dividends or profits where you own part of a business
  • Interest income
  • Profit from the sale of an asset that has increased in value, such a stock or real estate

Examples of Revenue

Let's look at an example to illustrate these concepts. Imagine you are an accountant working for medium-sized business and have been asked to prepare an income statement for the past fiscal quarter for the Chief Financial Officer. You collect the data and find the company had gross sales of $1,500,000 and expenses related to sales of $1,350,000. You also note that the company sold some assets that had appreciated in value resulting in a profit of $53,457. Interests in the company's money market account for the quarter totaled a paltry $750. You break down the income as follows:

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