What is the definition of revenue?

What is the definition of revenue?

• A. Money earned from providing a product or service
• B. Money paid to suppliers
• C. Net income after taxes
• D. Cash received from financing activities

Answer: (A)

Revenue is money earned from providing a product or service. It represents the inflows a business generates from its core operations and appears as the top line on the income statement. Under accrual accounting, revenue is recognized when the company has delivered the product or performed the service and the amount is measurable, even if cash hasn’t been received yet. This helps separate what the business earns from what the business pays out in the normal course of running operations. Money paid to suppliers describes expenses, not revenue. Net income after taxes is the profit remaining after subtracting expenses and taxes from revenue, so it’s the bottom line, not revenue itself. Cash received from financing activities relates to cash flows from borrowing, repaying debt, or issuing equity, which are financing activities, not revenue.

Revenue is money earned from providing a product or service. It represents the inflows a business generates from its core operations and appears as the top line on the income statement. Under accrual accounting, revenue is recognized when the company has delivered the product or performed the service and the amount is measurable, even if cash hasn’t been received yet. This helps separate what the business earns from what the business pays out in the normal course of running operations.

Money paid to suppliers describes expenses, not revenue. Net income after taxes is the profit remaining after subtracting expenses and taxes from revenue, so it’s the bottom line, not revenue itself. Cash received from financing activities relates to cash flows from borrowing, repaying debt, or issuing equity, which are financing activities, not revenue.