What's Revenue And The Difference With Income In Business?

What is revenue (unsplash)

YOGYAKARTA - Revenue is a very familiar term in the business world or business. Revenue is an important thing in financial reports when recording income that is included in business activities. For novice businessmen or people who want to run a business, you need to know what revenue is and how to calculate it.

Revenue is a term for income earned in business activities. Not a few people think that revenue and income are the same thing. Although both are interpreted as profits, both have differences.

Both revenue and income, both are important in the company's financial statements or binsis. Therefore, business people must understand what revenue is and its difference to income.

Revenue is the result obtained from the main operational activities of a company or business. In a simple sense, revenue is an advantage that can be generated by companies with business activities or activities.

Revenue is referred to as the result of all business activities recorded in the company's financial statements in a certain period. So revenue is often referred to as gross income because the calculated amount has not been deducted at production costs and others.

In business activities, revenue is different from income. So both cannot be included in a column of accounting calculations that are asthma. Revenue is a gross result of business activities in a certain period, while income is a net profit.

If revenue focuses more on income that is able to be generated by the company, then income is more on the value of the net profit that the company can get. Income shows the value of all additional income that can be achieved by business activities.

So revenue is income sourced from the activities of an entity or company. In practice, this income can be in the form of income from services, sales, royalties, interest, dividends, and rental results. Meanwhile, income calculation only includes incomes whose source is from the company's business activities.

To understand more clearly the differences in revenue and income, you need to know the source of income and how the two types of income are calculated.

The main factors that distinguish between revenue and income are in terms of income sources. Revenue has a source of income from various sectors, not only from business operations. Revenue can be obtained from other sources, such as royalties, interest, investment returns, and others.

Meanwhile, in the process of calculating the company's income, it only includes income sourced from company business activities. Examples of income income income, namely income from product sales, be it goods or services.

The next difference between revenue and income lies in the calculation method. The revenue calculation process includes each component of financing and revenue. Meanwhile, income calculations can be done by reducing the value of income with various company expenditure needs.

Income calculations can be done in two ways, namely net profit and gross profit. Net profit is calculated by reducing gross profit at other costs indirectly related to the production process, such as advertising costs, taxes, and others. While gross profit is calculated by reducing revenue value with cost of goods sold (HPP).

The calculation of a company's revenue or business can be done using three methods. Here are three ways to calculate the revenue that you can apply to your business:

Total revenue (TR) is a calculation with total revenue. To find out information regarding the company's total revenue, the formula that can be used is as follows:

total revenue = selling price x production amount

Average revenue (AR) is a calculation by knowing the company's average income. AR calculations are carried out by dividing the total income with the value of the number of products that have been successfully sold.

AR = total revenue : the number of products sold

Marginal revenue (MR) is carried out by calculating marginal income or an additional income due to the addition of each unit of goods sold. The following is a formula for calculating the marginal revenue:

Marginal revenue = additional TR : additional amount of goods sold

That's a review of what revenue is in business and how to calculate it. Revenue is an advantage that the company gets from overall activities. In contrast to income which is income from product and service sales business activities.

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