Difference Between Net Income And Revenue In Accounting With Examples
Here we study the difference between Net Income / Income and Revenue in Accounting with Examples. This is very basic and hot topic in Accounting.
Note: There is no difference between Income And Revenue. In British Accounting System, the term, “Income” is used while
American Accounting System uses the term, “Revenue”.
You can also read Accounting Terms to know better about these terms before reading differences between below terms.
Net Income:-
Income is equal to all the revenues earned by the company during the course of business - All the expenses incurred by the business to earn revenues Examples are Sales, Sales Commission, Commission Received, Royalty Payments Received, Purchases, Rent paid, Salaries Paid Prepaid Expenses, Advertising Expenses, etc.
Mathematically, we can write According To Matching Principle GAAP:
Net Income = Revenues - Expenses
Mathematically, we can write According To Matching Principle GAAP:
Net Income = Revenues - Expenses
Revenue is the price of products /
goods sold or services rendered by the company to its customers. For Example if Comfortable
Computer Chairs are sold by company businesses to their customers for Rs.90,000,
then Rs.90,000 is the revenue at which goods are sold.
Revenue is earned with the help of expenses. For Example Commission payments are the expenses for the company but this is necessary for the purpose of making Sales.
Similarly Advertising is an Expense for the company businesses but it is necessary to popularize the products and to capture customer value and ultimately Sales will increase.
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