Revenue (accounting)

Revenue is income generated by an entity’s ordinary activities, such as selling goods or providing services, before expenses are deducted. It is recognized under accounting rules when the relevant performance obligations are satisfied.

IFRS 15: An International Financial Reporting Standard that governs recognition and measurement of revenue from contracts with customers. Its five-step model sets the timing and amount of revenue for entities reporting under IFRS.
Sales: The exchange of goods or services for payment, usually carried out as part of a business’s ordinary activities. Sales are a common source of revenue, though revenue can include other ordinary activities.
Income statement: A financial statement reporting income, expenses, and profit or loss over a period. Revenue is commonly presented near the top of this statement.
Profit: The financial gain remaining when costs and expenses are subtracted from income over a period. Profit accounts for costs that revenue deliberately excludes.
ASC 606: A United States accounting standard that establishes a framework for recognizing revenue from contracts with customers. It is the US counterpart to IFRS 15, using a substantially converged revenue-recognition model.
Cash basis accounting: An accounting method that records income and expenses when cash is received or paid. Unlike accrual accounting, it can record receipts at a different time from earned revenue.
Revenue model: A business’s approach to generating income from customers, users, or other sources. It explains the recurring activities that produce reported revenue.
Cash flow: The movement of cash into and out of an entity during a period. Revenue can be recognized before or after the related cash movement.
Revenue recognition: The accounting process of deciding when and how much revenue to record. It determines when revenue qualifies for inclusion in the accounts.
Accrual accounting: An accounting method that records economic events when they occur rather than when cash changes hands. Revenue recognition follows the accrual principle rather than simply tracking collections.

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