Revenue

Revenue of a company is the total sum of money that a company actually holds. It may be received by providing services of by selling particular merchandise of the company. In simple words revenue may be called as the gross income of a company. The net income can be calculated later by subtracting costs and expenses from the revenue. The simple formula for calculating revenue is to multiply the number of goods sold to the unit price of the goods or merchandise. Revenue can be collected by activities other then selling for example for a university or college the total amount of the collected fee can be termed as their revenue.

Other methods of collecting revenue are by selling services, selling bonds and securities, selling rights of certain resources etc.  In certain cases interest income is also considered as revenue. Companies maintain their revenue accounts to receive revenues and whenever a company sells its services or merchandise these accounts are credited. Whenever a revenue account is credited the other accounts that might be debited may be the accounts receivable or the cash account.

Revenues can be categorized in two forms the operating revenues and the non-operating revenues. Operating revenues are those earned by major business activities such as selling or providing services where as revenues collected through other sources are termed as non-operating revenues such as interest earned by a company or a manufacturer on their investment. However for some companies such as banks and finance companies interest is considered to be main operating revenue.

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