Revenue, or SALES! The thing all of us want if we’re in business. Because, well, if we don’t have them we won’t be in business very long. But, in the world of accounting, there are a few things you need to know about Revenue.
First of all, Revenue is another name for Sales and it refers to all the things you sell. If you sell party supplies and you also sell your services as a party planner, you have two types of Revenue:
Party Supplies Sales
Party Planning Consulting Sales.
Together, both of them make up your Revenue. This is the “bucket” where you keep track of everything you sold at the price you sold it for. It doesn’t include whatever you paid for what you sold.
For example, Revenue wouldn’t include what you paid for all the cups, tablecloths, and tiki torches you purchased to sell as Party Supplies. That would be Cost of Goods Sold, which we’ll talk about tomorrow.
Revenue also doesn’t include money you have to refund to a customer or refunds or rebates you received. Or the money you might have gotten back if you accidentally paid a bill twice.
Refunds you give to customers would go in the “Sales Returns/Refunds” account (bucket).
And money you get as a rebate, or when you get money back because you accidentally overpaid a bill (for example) would go against the Expense bucket of that item. So, if you accidentally paid the telephone bill twice (or am I the only one who does this occasionally?) You would post the payment to Telephone expense.
Don’t let the word “post” freak you out, we’ll get there.
So, that’s it: Revenue is the money you get from selling stuff.
Which we love!
Tomorrow: Expenses!
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