What is more profit or revenue. Ways of generating income and revenue, what's the difference? Factors affecting profit

Financial relations permeate the life of society, and today it is impossible to become a successful person without understanding the essence of the most important economic categories. The concepts of "revenue" and "income" are often confused even by novice businessmen, since in the mass consciousness they are synonymous. In fact, it is very important to understand the difference between them, which will allow you to analyze any economic information more deeply.

Revenue- the amount of money received in the sale of goods or services. It can also be called "dirty" money, since costs are not taken into account when calculating the value. Revenue is always either positive or at zero, but never negative. It is determined either on a cash basis (with actual receipt of funds), or on an accrual basis (at the time of shipment of goods or provision of services, including with deferred payment).

Income- funds received by the subject of economic legal relations for a certain period of time. They are formed at the expense of the main activity of a legal or natural person, as well as with the help of attracted investments. The concept of "income" largely intersects with the concept of "profit" and is defined by "pure money": revenue minus expenses. This is a purely economic category that reflects the current financial condition of a legal entity or individual.

Comparison

So, revenue is a positive value, which can be equal to zero only in rare cases. Receipts are added together, forming a certain amount. Income can be negative when the revenue received does not cover the cost of obtaining it. Revenue is generated from the main activity of the enterprise: the production (sale) of products or the provision of services. Income can be received at the expense of the company's assets (renting out space, deposit, attraction of investments), as well as at the expense of the main activity (sale of goods and services).

At the same time, revenue is an attribute of a subject that is actively working in the economic sector. A person who, for one reason or another, is not engaged in socially useful activities (student, disabled person, pensioner, unemployed) can have income. These funds are generally not subject to income tax. In rare cases, revenue may equal profit. This happens in cases where, when receiving it, there is no expenditure part (provision of a certain list of services). However, most often it is revenue that exceeds income in terms of volume.

Findings site

Formation. The organization's revenue appears as a result of the sale of goods and services, and income is also due to the sale of shares, attracting investments, receiving interest on funds placed on a deposit account.
Way of origin. The proceeds can only be from an individual or legal entity conducting economic activities. Income can be from the unemployed and the student in the form of scholarships, financial assistance, benefits.
Calculus. Revenue is cash received from the sale of goods and services. Expenses are subtracted from revenue to calculate income.
Meaning. Revenue is either zero or positive. Income can be negative if the cost of obtaining revenue exceeds the profit received.
Ratio. Revenue is always greater than income, and only in rare cases can they be equal.

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Here is a real-life case that illustrates well the importance of financial literacy as an entrepreneur. Once, when filling out the balance sheet, the business owner indicated the balance of funds in the account, the cost of goods, the amount of receivables and payables, and in fixed assets wrote the words: “Nissan”.

Do you think that the entrepreneur's assets and liabilities converged, and what would the tax authority say about this?

Confusion in terms can lead to overpayments or arrears, which threaten tax penalties. Everyone should understand well and be able to distinguish from each other the main indicators of financial activity: revenue, profit, income, turnover and turnover.

Revenue, income and gross profit

Revenue- the amount of money received from the sale of goods, works, services. It can be determined by the “on shipment” method, that is, at the time of actual shipment of the goods or the provision of services, or it can be by the “cash” method, that is, at the time of receipt of payment. In addition to funds received directly from the sale of goods and services, it may also include income from the sale of valuable assets and other receipts.

According to the accounting regulations income An organization recognizes an increase in economic benefits as a result of the receipt of assets (cash, other property) and (or) the repayment of liabilities, leading to an increase in the capital of this organization, with the exception of contributions from participants (property owners)”.

Revenue is an indicator of financial well-being and the starting point for calculating the profit of an enterprise. It can be zero or positive, but never negative.

The concepts of "revenue" and "turnover" are generally identical. At the same time, “turnover” can often be used to refer to the non-cash turnover of the company, that is, the receipt of funds to the settlement account for goods, works and services sold.

In any case, both revenue, and income, and turnover are "gross" characteristics that do not take into account the costs (expenses) of the company.

Gross profit equal to the difference between revenue and expenses (costs) for the main activity (cost of goods or services sold). The financial result, which takes into account expenses in all areas of the company's activities, is called net profit (positive financial result) or net loss (negative).

Company turnover, trade turnover and revenue

Often confusion arises in the concepts of "turnover" and "turnover". We have already found out that turnover companies are the money that an enterprise has, this term refers to the economy. Turnover is a concept from the field of accounting, it denotes the amount of funds received from the sale of goods or services.

Trade turnover should be distinguished from revenue - in addition to direct income from trade, it may include other types of income and income from the sale of property. Thus, the revenue can be either greater than the turnover, or equal to it.

In addition, it is important whether you calculate revenue on an accrual basis or on a cash basis. As mentioned earlier, in the first case, income or expenses are taken into account in the period to which they relate, in the second - when they are directly paid. If the sale is made in installments or deferred payment, then, in the case of cash settlement, revenue and turnover may also differ.

The difference between profit and turnover

If there is nothing wrong with calling revenue turnover, then it is very important to distinguish profit from turnover, for example, in order not to overpay income tax.

Thus, the concept of "turnover" characterizes how much money the company has in principle, and profit is how much money the company can invest in its own development.

The difference between expense and loss

Expenses are all the money a company spends to produce and sell its product. These include material costs, salaries and other payments to employees, the cost of repairing equipment and premises, rent, taxes.

When expenses exceed the income of the company, there is a loss.

Revenue vs profit, what's the difference? In this article, we will explain in simple terms what each of these concepts represents. And what is the difference between them - we will show with an example.

Revenue and profit are important economic concepts. They are among the key performance indicators of the company. To understand how they differ, you need to know how revenue and profit are formed.

What is revenue

Let's first understand what income is. In the economic literature, revenue is the money received from the sale of goods, works or services. Economists calculate this indicator for the organization as a whole, for activities, divisions, types of products, etc.

In accounting, the concept of revenue is disclosed in PBU 9/99. For an accountant, revenue is also income from the sale of goods, the performance of work or the provision of services (paragraph 5 of PBU 9/99). And it consists of proceeds from ordinary activities:

cash receipts,
Receipts of property having a monetary value,
The amount of accounts receivable.

Unlike economists, an accountant considers not only cash receipts to be revenue. The proceeds may be the receipt of other property, as well as the debts of buyers.

Example

Sfera LLC applies the simplified taxation system and works without VAT. In July 2019, Sfera LLC sold goods to customers for a total of RUB 800,000. For the goods sold, payments from buyers in the amount of 650,000 rubles were received to the current account. Goods worth 150,000 rubles. were implemented with deferred payment, payment for them will be received in August. The accounting revenue of Sfera LLC in July 2019 amounted to 800,000 rubles. Despite the fact that 150,000 rubles. not yet paid.

In the example, we did not accidentally mention VAT. According to clause 3, clause 6 of PBU 9/99, when calculating revenue, taxes, fees and some other amounts are excluded:

VAT, excises, export duties, other obligatory payments,
Amounts in favor of the committent, principal, etc. under commission and agency agreements,
Amounts of prepayment and advance payments,
Amounts received as a deposit or pledge,
The amount of debt repayment under credit or loan agreements.

And how in accounting revenue correlates with the income of the company? According to paragraph 4 of PBU 9/99, the company's income is all receipts that lead to an increase in the company's capital. They are divided into:

Income from ordinary activities is revenue,
Other supply.

That is, revenue is one of the types of company income. The statement of financial results helps to understand this. It is in it that the income of the enterprise is reflected.

Income from ordinary activities, that is, revenue, is indicated in line 2110 of the report. And other income is indicated in other lines:

Income from participation in other organizations - line 2310,
Interest receivable - line 2320,
Other income - 2340.

What is meant by other income? For example, this is income from the rental of temporarily unused property. Or fines and penalties for non-fulfillment of contractual obligations by counterparties.

What is profit

Now let's see what profit is. Profit is the difference between receipts and expenditures aimed at obtaining these receipts. That is, in general, profit is the difference between all the income and expenses of the organization. Moreover, the difference must be positive. If expenses are greater than income, then the difference is negative - this is a loss.

Profit and revenue have two similarities:

Both revenue and profit are part of the company's revenues,
When calculating both indicators, the amounts are taken minus VAT, excises and other obligatory payments.

What income and what expenses to take for calculation depends on the type of profit that needs to be determined:

Type of profit	Formula for calculation	Calculation according to the income statement
	Revenue - cost of sales	Line 2110 - line 2120
Revenue from sales	Gross Profit - Selling Expenses - Management Expenses	Line 2100 - line 2210 - line 2220
Profit before tax	Profit from sales + income from participation in other organizations + interest receivable + other income - interest payable - other expenses	Line 2200 + line 2310 + line 2320 - line 2330 + line 2340 - line 2350
Net profit	Profit before tax - income tax	Line 2300 - line 2410

What is the difference between revenue and profit

Now that we have revealed the concepts of income, revenue and profit, we can say how revenue differs from profit:

Revenue is all the money that a company receives from ordinary activities: the sale of goods, the performance of work and the provision of services,
Income is revenue plus other cash receipts. From income, the company pays its expenses and transfers taxes,
Profit is what remains of income after paying all expenses and taxes. The owners of the company can dispose of this money at their discretion. For example, send it to the development of the organization or take it in the form of dividends.

To understand the difference between revenue and profit, the table will help:

Criterion	Revenue	Profit
	Money from the sale of goods, works and services	Money from sales minus expenses and taxes
Index	Is an indicator of the volume of sales	Is the financial result of the company
	Only income is taken into account, excluding expenses.	Accounting for income and expenses
Meaning	Can only be a positive number	Can be positive, zero and negative (loss)
	One indicator is calculated	There are several types: gross, from sales, before tax, net

Revenue and profit, what is the difference: an example

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Let's use an example to show the difference between revenue and profit.

Example

OOO "Omega" is a manufacturer of production equipment. For the third quarter of 2019, the company received the following results (to simplify the example, we do not take into account VAT):

Products sold for a total amount of 8,500 thousand rubles,
The cost of goods sold amounted to 5,700 thousand rubles,
Commercial expenses amount to 850 thousand rubles,
Administrative expenses - 1,120 thousand rubles.

Also, during the quarter, Omega LLC leased an idle production facility and received a rent in the amount of 800 thousand rubles.

Determine revenue, income and profit:

The company's revenue amounted to 8,500,000 rubles,
Income amounted to 9,300,000 rubles. (8,500 thousand rubles + 800 thousand rubles),
Profit before tax is 1,630,000 rubles. (9,300 thousand rubles - 5,700 thousand rubles - 850 thousand rubles - 1,120 thousand rubles),
Income tax is 326,000 rubles. (1,630,000 rubles * 20%),
Net profit is 1,304,000 rubles. (1,630,000 rubles - 326,000 rubles).

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Profit and revenue are two different concepts, but they accompany the activities of any company constantly. Their meanings are quite close to each other, as they are often used in the same context. But there is a difference between them.

Revenue

The company's revenue is cash receipts from the sale of goods, services or work on the market. It represents the result of the activities of the entire company for a certain period of time. In another way, the revenue is called the gross income of the company.

Revenue is reflected in accounting on account 90 "Revenue", serves to determine the amount of tax paid by companies operating on a simplified taxation regime.

Revenue is the most common measure of a company's performance. However, not everything can be considered revenue. As a rule, these are income from the main activity. When compiling the balance sheet, revenue is taken into account net of indirect taxes, in particular VAT, which is actually withheld from the buyer.

Revenue can be predicted. Based on the data of previous sales volumes and cash receipts, the accountant can predict the expected revenue in the next reporting period. The total revenue of the enterprise for the reporting period consists of:

Proceeds from core activities (sale of goods, provision of various services or performance of work);
Revenue from investment activities (financial result from the sale of non-current assets or the sale of any securities that belong to the company on the basis of ownership rights);
Income from the financial activities of the company.

Profit

Profit is an important indicator of a company's performance. It is economic and accounting.

Economic profit - the difference between the total income of the enterprise and the costs (explicit and implicit). This indicator shows how efficiently the company worked in a certain period of time. Economic profit can be distributed among the founders. Accounting profit is profit used for accounting purposes. Taxes are deducted from it, and it is reflected in the Profit and Loss Statement. It is equal to the difference between the total income and the explicit costs of the enterprise.

The main profit of the organization consists of indicators:

Profit (or loss) from the main activity (sales of products, provision of services or performance of work);
Profit (or loss) from ancillary activities (for example, profit from renting a warehouse or performing additional work under a contract).

The relationship between profit and revenue is that profit is the difference between the total revenue and the total costs of the enterprise. Profit can be negative (loss), while revenue is not.

Based on the performance of past periods, the accountant can predict future profits. To make such a forecast, it is necessary to take into account not only expected income (future revenue), but also expected expenses, as well as market conditions and predicted changes in the market.