Definition of "Revenue"
While trying to determine your net income, you might come across the term revenue, sales, or gross income. So what does revenue mean? Through revenue, we understand the income generated within a business from sales of products or services rendered. On the income statement, revenues will appear as sales, and they include deductions for returned merchandise as well as discounts for products or services.
The formula to calculate revenue
Revenue = Price + Units sold
What is the definition of Revenue?
The revenue definition is the money that comes into a company from its business activities. As mentioned above, the term can be referred to as sales or gross income and is used to determine the price-to-sales ratio. It is also necessary for the accounting of the company's financial statement, but the type of accounting dictates how revenue is calculated. While the formula presented above is the basis for determining the revenue, that formula is influenced by the accounting method used.
The accrual method of accounting includes revenue that comes from sales made on credit for goods and services purchased by the customer. The cash flow statement will record the collection of money owed that has been paid through credit. Here we can think of credit cards that lead to transactions ending in a receipt that will later be exchanged into money.
The cash accounting method only takes into account sales as revenue when the payment is received. In this case, if a customer orders a product online and pays in advance, they will receive a receipt. That receipt is not accounted for as a sale until the payment is received, then the sale becomes revenue.
What does revenue mean for real estate?
If you’re a REALTOR® and you’re wondering what is the meaning of revenue, you can take a look at your income statement. On the top line, you’ll see revenue, sales, or gross income. That is the income that your activity generated over that accounting period. From that value, your expenses are subtracted until you get to the bottom line, which is net income. When revenue is larger than expenses, you will get a profit, but if your expenses are larger than your revenue, you will experience loss. In order to increase profit, you will have to increase revenue and/or limit expenses.
Popular Real Estate Terms
The assessment in real estate definition means the evaluation of a property’s value by an assessor. They are generally required to evaluate the property annually as the assessment is ...
Has not been registered on the companies books. It belongs to the person holding it. See also bearer bond; bearer instrument. ...
Same as term financial institutions and markets: Institutions acting as intermediaries between suppliers and users of money. The financial markets are where those wanting funds are matched ...
The term statute is a written law that is adopted by a legislative body from the country, federal, state, county, or city level. The statute definition can be a legislative written decree ...
Person leaving from work to spend time in leisure activities. pay in full the balance on a debt either at or before the maturity date. Penalties may be assessed on prepaying a mortgage. ...
Expenditures paid for in advance such as property insurance, rent, and interest. Prepaid expenses are not used or consumed until later. They are typically of a recurring nature. ...
Use of other people's money (OPM) in an attempt to maximize the return but at high risk. The use of leverage in real estate investing is a way to maximize yield on a small down payment. ...
The add-on interest is a type of interest that is figured into the total cost of a loan over its entire life. The interest is added to the principal and divided by the number of monthly ...
Giving one's approval to another, e.g., a fiduciary, to manage his or her finances. ...
Have a question or comment?
We're here to help.