AccountingBusiness

Difference Between Income and Revenue

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Main Difference

The main difference between income and revenue is that income is the money left for business after it subtracts expenses and costs from its revenue, whereas revenue is the total amount of money that a business earns.

Income vs. Revenue

Income and revenue both are financial and business terms. These terms refer to positive incoming cash flow. But they are different terms. For corporate entities and accountants, income and revenue each represent a different type of incoming cash and each results in different placement on the financial statements of a company. Income is the money left for business after it subtracts expenses and costs from its revenue. It is also known as “net profit.” Revenue is the amount of money earned through any business. A business earns this money by doing activities like selling a product or a service or by an indirect means. Indirect business revenue can be gained when a business place some money in investments. For example, everything that a store sells, excluding any coupons or discounts, from clothing to cleaning supplies, is revenue.

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The placement for income is often the “bottom line.” The placement for revenue is net sales or the “top line.” These placement terms are sometimes used instead of the terms income and revenue in business communications. Income and revenue adhere to different computations. Income is calculated by subtracting expenses and costs from the total revenue. Revenue is calculated by the multiplication of the price with the number of units sold.

Comparison Chart

IncomeRevenue
Money left for business after it subtracts expenses and costs from its revenueThe total amount of money which a business earns
Computation
Subtracting the expenses and costs from the total revenueMultiplication of the price by the number of units sold
On Financial Statement
Bottom lineTop line
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What is Income?

Income is the net earnings of a company during a particular accounting year. It is calculated when the divided preferred stock is deducted from the net profit of the business. For corporate entities and accountants, income represents a different type of incoming cash and each result in different placement on the financial statements of a company. Income is the money left for business after it subtracts expenses and costs from its revenue. It is also known as “net profit.” For example, a store Wal-Mart sells things from clothing to cleaning supplies. If the store has means of incoming cash flow, such as investments and other income streams, this cash flow is not from Wal-Mart’s primary means of business. It is known as income.

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Income remains after all expenses (rent, payroll, cost of goods sold (COGS) have been accounted for. Income is also known to be the “bottom line.” This placement for income is sometimes used instead of the original term income in business communications. Income is calculated by subtracting expenses and costs from the total revenue. In simple words, income is the residual positive amount left with the company. The company either holds it as retained earnings or distributes it among the equity shareholder. It can also be said that income is the net rise in the equity fund of the shareholder. When we see in the context of an individual, then income is the total of the rent, profit, salary, interest, and gains from any source.

Types of Income

  • Gross income (before any expenses are deducted)
  • Net income (after all expenses are deducted)

What is Revenue?

Revenue is the money that is received by the company or business from its day to day operating and non-operating activities. Operating activities refer to the regular activities of the business, such as the sale of goods and rendering of services. Non-Operating Activities refers to the activities other than operating activities of any business, such as the sale of assets or the amount that is received by the commission, rent, and interest, etc. For corporate entities and accountants, revenue represents a different type of incoming cash, and each result in different placement on the financial statements of a company.

Revenue is also termed as turnover, net sales, or the top line. These placements for revenue are sometimes used instead of the original term in business communications. Revenue is the total amount of cash from the sale of services and goods for a company. For example, everything that a store sells, excluding any coupons or discounts, from clothing to cleaning supplies, is revenue. Revenue is the total amount of money earned by a business from activities like selling a product or a service or by an indirect means. Indirect business revenue can be gained when a business place some money in investments. Revenue is always shown in the first line of the income statement. It is calculated by the multiplication of price with the number of units sold.

Types of Revenue

  • The sale of products, goods, or merchandise
  • The sale of services, e.g., consulting
  • Rental income from a commercial property
  • The sale of tickets to an event
  • Interest income from lending

Key Differences

  1. Income is received after the deductions for expenses and costs from the revenue on the flip side; revenue is generated after a business produces and sells products and services.
  2. In the cycle of production, income provides the monetary power and cash flow to produce the next cycle of production; on the other hand, revenue is the starting point of income.
  3. Income remains after all expenses (rent, payroll, cost of goods sold (COGS) have been accounted for, whereas revenue is the total amount of cash that is received from the sale of services and goods for a company.
  4. In a financial statement, income is placed at the bottom; conversely, revenue is at the top.
  5. The computation of income is included subtracting the expenses and costs from the total revenue, while the calculation of revenue includes multiplying the price by the number of units sold.

Conclusion

People mistake income and revenue as the same thing. However, they are two different financial concepts.

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