Revenue is the amount of money a company earns from selling goods or services to its customers. It is the top line or gross income figure from which expenses are subtracted to determine net income or profit. Revenue is often used by finance professionals to determine a companys profitability. There are different ways to calculate revenue, depending on the accounting method employed. For example, accrual accounting includes sales made on credit as revenue for goods or services delivered to the customer, even if payment has not yet been received.

Revenue is recognized when the benefits and risks of ownership have transferred from seller to buyer or when the delivery of services has been completed, according to the revenue recognition principle in accounting. This means that companies often sell their products on credit to customers, meaning that they won’t receive payment until later. Reporting revenues in the period in which they are earned is known as the accrual basis of accounting.

There are different types of revenue, including gross revenue and net revenue. Gross revenue is the total revenue generated by all income sources, including any discounts or returns, but not including expenses or taxes. Net revenue, also called net income, shows revenue after all expenses, cost of products sold, depreciation, interest, and taxes have been subtracted.

Examples of revenue include a retailers sales of merchandise, sales of extended warranties, and service revenue. Understanding revenue and how to calculate it is a core skill for finance professionals.