Every type of business will essentially require revenue. It is a type of income earned when sale of goods and services takes place. When revenue is earned without eliminating the costs and expenses (overheads, wages, sundry expenses, etc) then it is termed as Gross Revenue. On the other hand, the money that is left at the end of the day after subtracting the expenses and costs is called the Net Revenue.
Revenue, however, is not the same as profit. If your expenses and costs to bring in revenue surpass the income from the sales of good and service, then you have clearly lost money.
There are two basic types of revenues:
To compute revenue, the basic formula below is used:
Revenue = Quantity X Price
The amount of revenue is determined using two things: first, the total number of items sold and, second, the selling price of each item.
For example; Company ABC sold 2000 boxes of chocolate, at $30 per box, then: 2000 X $30 = $60000
Revenues are fundamental when evaluating accounting or financial ratios, such as the GMP (gross margin percentage). When a company receives revenue, it is usually listed on the income statement's first line, and is termed as revenue, sales, net revenue or net sales. Under governments, the revenue is the money that is availed through taxes, fines, government grants or subsidies, bonds and other securities, or any sales made. More so, for nonprofit organizations, revenue is termed as 'gross receipts' that basically includes the donations collected from companies, individuals or governments, fundraising activities, investments and membership fees.
Financial education is so important, but barely taught at all in our schools. Having resources online is great, but not if they are inaccessible to so many. Thanks 508!