What is revenue in accounting

HomeAccounting, Taxation, and ReportingManagerial & Financial Accounting & ReportingRevenue (Accounting) - ExplainedWhat is Revenue?Written by Jason GordonUpdated at April

What is revenue in accounting
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Revenue (Accounting) - Explained

What is Revenue?

Written by Jason Gordon

Updated at April 7th, 2022

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Table of ContentsWhat is Revenue?When Do We Earn Revenues?Examples of RevenueSummary of Revenue

What is Revenue?

A revenue in its basic form is a resource generated from a company's earnings activity. Really revenues are just what we earned If we earn it, it's a revenue.


Back to:Accounting & Taxation

When Do We Earn Revenues?

The revenue recognition principle states that we earn revenue when we deliver the product or service or when the product or service is rendered. If I have not rendered the product or service, then it's not a revenue.

Examples of Revenue

Example 1: If I'm selling something to you (a pin). You want this pin. You say, hey I really want that pin. I say, sure - here's your pin. Then you give me 20 bucks because it's an expensive pin. Okay. I have 20 in my hand you have the pin in your hand. I have rendered the product or service to you. This is a revenue. It doesn't even matter if you have paid the cash yet. The fact that you now owe me the money means that this a revenue.

Example 2: You say, I really want that pin. I said, sure - and I give you the pin. You say, I don't have 20 bucks on me right now. Can I give it to you next week? Well, I've given you the pin, so that's still a revenue for me. It doesn't matter that I haven't received the cash. It's a revenue for me because I have given you (delivered or rendered) the product; therefore, it is a revenue,

Example 3: You say, I really want one of those pins. I say, I don't have a pen right now. Can I get it to you next week? You say, sure. I have 20 in my pocket right now. I'll go ahead and pay you now. I take the money and promise to deliver the pin. This is not revenue. I never rendered the product or service. I got twenty dollars cash, but I cannot claim that as revenue because I haven't given you the product service.

Summary of Revenue

Whether something is a Revenue depends upon whether I have delivered or rendered you the product or service,

  • What are Financial Statements?  Financial Accounting
  • Consolidated Financial Statements
  • What is the Income Statement?  Financial Accounting
  • What are Revenues?  Financial Accounting
  • What are Expenses?  Financial Accounting
  • What is the Statement of Retained Earnings  Financial Accounting
  • What is a Balance Sheet?  Financial Accounting
  • Accounting Equation Definition
  • What are Assets?  Financial Accounting
  • What are Liabilities?  Financial Accounting
  • What is Equity?  Financial Accounting
  • What is the Statement of Cash Flow?  Financial Accounting
  • Analysis and Creating Financial Statementrevenue

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Table of ContentsWhat is Revenue?When Do We Earn Revenues?Examples of RevenueSummary of Revenue

What is Revenue?

A revenue in its basic form is a resource generated from a company's earnings activity. Really revenues are just what we earned If we earn it, it's a revenue.


Back to:Accounting & Taxation

When Do We Earn Revenues?

The revenue recognition principle states that we earn revenue when we deliver the product or service or when the product or service is rendered. If I have not rendered the product or service, then it's not a revenue.

Examples of Revenue

Example 1: If I'm selling something to you (a pin). You want this pin. You say, hey I really want that pin. I say, sure - here's your pin. Then you give me 20 bucks because it's an expensive pin. Okay. I have 20 in my hand you have the pin in your hand. I have rendered the product or service to you. This is a revenue. It doesn't even matter if you have paid the cash yet. The fact that you now owe me the money means that this a revenue.

Example 2: You say, I really want that pin. I said, sure - and I give you the pin. You say, I don't have 20 bucks on me right now. Can I give it to you next week? Well, I've given you the pin, so that's still a revenue for me. It doesn't matter that I haven't received the cash. It's a revenue for me because I have given you (delivered or rendered) the product; therefore, it is a revenue,

Example 3: You say, I really want one of those pins. I say, I don't have a pen right now. Can I get it to you next week? You say, sure. I have 20 in my pocket right now. I'll go ahead and pay you now. I take the money and promise to deliver the pin. This is not revenue. I never rendered the product or service. I got twenty dollars cash, but I cannot claim that as revenue because I haven't given you the product service.

Summary of Revenue

Whether something is a Revenue depends upon whether I have delivered or rendered you the product or service,

  • What are Financial Statements?  Financial Accounting
  • Consolidated Financial Statements
  • What is the Income Statement?  Financial Accounting
  • What are Revenues?  Financial Accounting
  • What are Expenses?  Financial Accounting
  • What is the Statement of Retained Earnings  Financial Accounting
  • What is a Balance Sheet?  Financial Accounting
  • Accounting Equation Definition
  • What are Assets?  Financial Accounting
  • What are Liabilities?  Financial Accounting
  • What is Equity?  Financial Accounting
  • What is the Statement of Cash Flow?  Financial Accounting
  • Analysis and Creating Financial Statementrevenue

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