Revenue, Business Profits And Losses,

Revenue,
receipts of a government or a business. In the United Kingdom it is not (technically) the same as income, the term used to refer to the receipts of a private individual and often to the receipts of non-profit-making enterprises. In the United States the term income is widely used instead of profit.

Governments raise revenue, mainly through taxation, in order to pay for government expenditure on, for example, the salaries of teachers. In the United Kingdom the body responsible for collecting taxes is known as the Inland Revenue. If government revenue is more than government expenditure, a country is said to be running a budget surplus. If government expenditure is more than government revenue, a country is running a budget deficit, which has to be financed through borrowing or printing money.

Companies must have revenues to survive. The difference between their revenues and their expenses (money spent on production processes, interest payments on loans, and so on) determines their profit or loss. A company whose expenses are consistently more than its revenues will not be allowed by its creditors (who have financed the gap between revenues and costs) to continue in its present form.

In accounting, there are several ways in which the term revenue is used. A revenue account is the equivalent of the profit and loss account. Revenue expenditure (as distinct from capital expenditure) is expenditure that is deemed to affect only the current accounting period and is therefore written off to the revenue account during that period. Judgments also have to be made on when a company should or can recognize revenue. In general, it depends more on when contractual obligations are fulfilled than when the money is received; for example, revenue is normally recognized when delivery has been made and the goods have been invoiced even though the payment may not be received for another month.