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What is Revenue?

Meaning of Revenue

Revenue is the earnings that an enterprise has from its usual business pursuits, usually from the sale of commodities, and services to consumers. It is also mentioned and referred to as turnover or sales. A few companies get income from royalties, other fees, or interests.

An enterprise believes that it can sell as many quantities of the commodity as it requires by setting a cost price less than or equivalent to the market cost price. In such a case, there is no logic in setting a cost price lower than the market price. In other words, the enterprise should sell some amount of the commodity so that the cost price it sets is exactly equivalent to the market cost price.

Types of Revenues

Hence,

                                                                   TR = p × q

                                                           AR TR/q = p × q/q = p

                                                  MR Change in total revenue/Change in Quantity

Revenue is generated by the sale of goods or services to customers, while income is the amount remaining after all expenses have been subtracted from revenue. Thus, revenue appears in the top line of an income statement, while income appears in the bottom line.

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