Revenue vs income. Here we will be reviewing Revenue vs income and the difference between both of them. This is because, many people mistake ‘income’ and ‘revenue’ as the same thing when in actual fact. there are many small differences between the two financial concepts.
Income is the net profit, (i.e.) what is left after expenses. And taxes are deducted from revenue. For individuals, income can be seen as the total wages. Salaries, tips, rents, interest, or dividends received for a specific time frame.
The two terms, revenue, and income portray different. But equally valuable stories. While a good total revenue. Affirms an ultra-efficient sales department, that is excellent at finding and winning new business. Your income, on the other hand, shows how well you are able to mesh your ability to. Sell into a sustainable approach to running your company. Thus understanding the difference between revenue and income as well as their similarities is very important for any business, particularly in terms of how earnings are reported in accounting.
Revenue Vs. Income: What’s the Difference?
- Sometimes called ‘gross sales’, revenue is the total amount that a company’s main operation generates.
- Gains from investment can also be included with revenue, and it sits at the top of your income statement.
- Also called ‘net income’, or ‘net profit’, income is the revenue you have left after all your operating expenses have been subtracted.
- Income is also referred to as a ‘company’s bottom line’, because it offers a full picture of cash flow, the total amount of money being transferred into, and out of the business.
- Income sits at the bottom of your income statement.
Situations Where Both Revenue and Income are Used
Both revenue and income concepts are used at different levels like personal, business, and national. While accounting is usually used to calculate income and revenue on a personal and business level, economics, on the other hand, takes the national level and global view.
Revenue and income are side-by-side concepts that are needed in the cycle of production. While revenue acts as the starting point of income, income provides the monetary power and cash flow needed to produce the next cycle of production and in extension the revenue.
When it comes to a financial statement, revenue and income are often placed at different venues. While revenue remains at the top, income is found at the bottom.
Understand that both income and revenue are concepts used in business, finance, and economics. Both terms denote money or cash equivalents that are received by an entity, be it a business, company, government, or a person. Both concepts are observed after or within a specific period of time.
Note that, revenue is generated after a business produces and sells products and services, and its computation (i.e.) includes multiplying the price by the number of units sold. Income, on the other hand, is gotten after the deductions for costs and expenses from the revenue.