Revenue: Meaning and Definition
Financial Statements
Explained Simply
Revenue sits at the top of the income statement, which is why it is often called the "top line". Subtracting the cost of sales gives gross profit, and subtracting operating expenses and tax gives net profit. Revenue is not the same as profit: a business can have high revenue and still make a loss. In everyday use "income" can mean revenue, but in accounting income also includes other gains, and for individuals it means earnings such as salary. A VAT vendor reports revenue excluding VAT, because the 15% VAT charged to customers is collected on behalf of SARS and is not the business's own money. Revenue is recorded when it is earned, which may differ from when cash is received.
Want to see what is left after cost of sales? Use the gross margin calculator.
Related Terms
- Income StatementAn income statement (also called a profit and loss statement) is a financial report that shows a business's revenues, expenses, and resulting profit or loss over a specific period.
- VAT (Value-Added Tax)VAT is a consumption tax of 15% levied on most goods and services in South Africa, collected by businesses on behalf of SARS.
- Accounts ReceivableAccounts receivable (also called debtors) is the money owed to a business by its customers for goods or services that have been delivered but not yet paid for.