Income vs Revenue

Income and revenue are two important components of a financial statement. If you look at the financial statement of any company the first entry that is made is of the sales or the revenue generated. This is the figure that tells the amount of cash flow in the business during the time period covered by the financial statement. This is an important figure as to make profit or income, a business needs to generate sales. Therefore revenue refers to all the money that a business generates by doing what it does- whether selling products or providing services. On the other hand, income refers to the profit or the money company is left with after deducting all the expenses from the revenue or the sales. These expenses are the costs of doing business such as payments to employees, electricity bills, taxes, interest on loans etc. Thus it is clear that there is a lot of difference between income and revenue.

If a company’s financial statement shows a small figure in the entry earmarked as revenue, it simply reflects that the company is less likely to be profitable. For companies that are starting up, initial expenses are too high. One can easily sum up such enterprises as having a good potential in future if they are able to show good revenue figures. In accounting practice, income is always used in the context of net income. Net income is the same as profit. Income statement is one of the most important financial statements of an organization and the basic premise of this income statement is the total revenues minus all expenses equals Net Income. In other words,

Revenues- All expenses= Net Income

Revenue means sales in any financial statement and it is the first entry in any financial statement.

Income means profit and it is the last entry in any financial statement.

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