Revenue

Definition

The amount a business earns by selling goods or providing services is called revenue.

Explanation

The remuneration of goods sold or services provided is called revenue. It includes both cash received for goods sold and services rendered and accounts receivable for goods sold and services rendered on credit. Revenues appear in trial balance are of the following two kinds:

  1. Direct Revenues
  2. Indirect Revenues

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Direct Revenue

Revenue earned from routine activities of the business such as the revenue generated from the sale proceeds of goods and rendering services to customers is called direct revenue. It is credited to Trading Account.

Indirect Revenue

Revenues earned through other than the routine activities of the business are called “Indirect Revenues”. The following Items are included in indirect revenues.

  1. Commission Received
  2. Interest Received
  3. Rent Received
  4. Discount Received
  5. Discount from Creditors
  6. Discount on Purchases
  7. Dividend Received
  8. Interest on Drawings
  9. Reserve for Discount on Creditors
  10. Interest received on renewal of bills
  11. Bad Debts Recovered
  12. Provision for Bad Debts (Cr. Balance)
  13. Royalty Received
  14. Apprentice Premium
  15. Miscellaneous Income
  16. Sundry Income

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