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Many people who are working in the business world are confused about the difference between revenue and profit. These are very similar ideas, so the confusion is understandable. They are also very different things, though, so it is important that you understand just what each one means. You do not want to make a mistake in this, or you might think that your company has more money than it actually does. This can lead to poor financial decisions that you will come to regret later on.
First, you need to know what profit is. This is simply the amount of money that your company makes after you have paid for everything. You might have fifty thousand dollars worth of expenses, for instance. If you make one hundred and fifty thousand dollars, you cannot count this all as profit. You have to remember that your expenses need to be covered by the money that the company brings in. This means that you will make a profit of one hundred thousand dollars.
The total amount of money that you bring in, before you factor in the costs that you have to cover, is known as your revenue. In the case mentioned above, this would be the one hundred and fifty thousand dollars. This is the sheer amount of money that a company makes. As you can see, it would be very dangerous to confuse the two. Some companies have a lot of costs before they can take in any profit, so you could end up thinking that your business is doing very well when it really is not if you just look at revenue.
While it is uncommon for a company to have negative revenue, it is still possible for them to lose money. If the costs are higher than the amount of money that comes in, the company can go into debt. That is why so much time is spent analyzing the correlation between revenue and profits. Companies all want these numbers to be as close together as possible since this will mean that they are making more money. They do this by reducing the costs that they have as far as possible.
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Definition of incremental revenue?
Incremental Revenue is the increase of revenue between a new revenue and a previous revenue, thus the formula: Incremental Revenue = New Revenue - Previous Revenue
What is the meaning of average revenue and marginal revenue?
what is average revenue?
Is service revenue an asset or liability?
Services revenue is revenue same as product revenue and it is not an asset or liability of the business.
Gain on sale of land is an asset or revenue?
It's a revenue. However, it's not a "Sales revenue", it's a "Other revenue".
Unearned revenue is a contra revenue account?
Unearned Revenue is a Liability Account
What is the journal entry for prepaid revenue?
prepaid revenue is debited and revenue is credited
What are the three types of revenue?
The three types of revenue are operating revenue, non-operating revenue, and other revenue. Operating revenue is generated from a company's primary business activities, while non-operating revenue includes income from secondary activities. Other revenue encompasses one-time or irregular income sources.
Is accrued revenue an asset?
no, its a revenue
Deferred revenue is revenue that is?
Deferred.
What is external revenue?
external revenue
Is sales revenue a revenue?
Yes it is.
Is service revenue a debit or cedit?
Services revenue is also a revenue and like all revenue accounts which have credit balance as normal balance, services revenue also has a credit balance.
