Revenue
The total amount of money generated by a business from its operations before any expenses are deducted.
Definition
Revenue, also known as the "top line," represents the total income a company generates from its business operations. It includes all money received from customers for products sold or services provided, and is the starting point for calculating profitability.
Types of Revenue
Recurring Revenue
Predictable income that repeats over time
- • Subscription fees
- • Monthly/annual contracts
- • License fees
One-time Revenue
Income from individual transactions
- • Product sales
- • Consulting projects
- • Setup fees
Real-World Example
SaaS Company Monthly Revenue:
- • Subscription revenue: $45,000
- • Setup fees: $3,000
- • Professional services: $7,000
Total Monthly Revenue = $55,000
Recognition Principles
Key Points:
- • Revenue is recognized when earned, not when cash is received
- • Must be from legitimate business activities
- • Should be measurable and collectible
- • Different accounting standards may affect timing