Glossary · Also called Sales / turnover
Revenue
The income a business earns from its main activities, mainly from selling goods or services.
What it means
The income generated from the sale of goods or the provision of services in the ordinary course of business, before deducting expenses.
Example
A shop's sales for the year are its revenue.
Why it matters
Revenue is the top line of the income statement, from which expenses are deducted to find profit.
In practice
Revenue is often called sales or income. It is a credit balance in the ledger and the top line of the income statement. Cost of sales and expenses are deducted from it to reach profit.
Under the accruals concept, revenue is recorded when the goods or services are supplied, not when the cash arrives. A credit sale of RM1,200 in December is December revenue even if the customer pays in January. In double entry, that sale credits the sales account and debits the customer's receivable account.
Revenue is often confused with a receipt. A receipt is simply cash coming in. It may include money that is not revenue at all, such as a bank loan or new capital from the owner. A loan of RM5,000 increases cash but it is a liability. It never appears in the income statement. Only income earned from ordinary trading counts as revenue.
If you are unsure when a sale counts as revenue, one of our teachers can go through timing questions with you until the rule is clear. Book a trial class.
Related terms
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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