All inflows of the business are called Revenue Accounts, according to SFAC 6 as “inflow from delivering or producing goods, rendering services or other activities that constitute the entity’s ongoing major or central operations” (Para. 78). Revenue accounts are the amount of money that a company receives from its operating activities in a given period, mostly from sales of products and/or services to customers. It is not to be confused with the terms “profits” or “net income” which generally means total revenue less total expenses in a given period;
Profit = Revenue – Cost
Revenue = Cost + Profit or (Loss)
Revenue is calculated by multiplying the price at which goods or services are sold by the number of units sold.
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Mukharji, A., & Hanif, M. (2003). Financial Accounting (Vol. 1). New Delhi: Tata McGraw-Hill Publishing Co.
Narayanswami, R. (2008). Financial Accounting: A Managerial Perspective. (3rd, Ed.) New Delhi: Prentice Hall of India.
Ramchandran, N., & Kakani, R. K. (2007). Financial Accounting for Management. (2nd, Ed.) New Delhi: Tata McGraw Hill.