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How to distinguish a profit, revenue and income

How to distinguish a profit, revenue and income

Revenue, income and profit as the financial terms used in economics, accountancy and just in everyday life. This is their resemblance.

Differences in the accounting of funds and the amount of money thatimplied by these concepts, much more. The first and the main difference lies in the fact that profit is obtained after deduction of all costs and expenses from revenue.

Income - is the subtraction of revenue cost of goods manufactured or purchased goods.

How is the revenue

Revenue consists of a sum of money,derived by an enterprise or by its activities (sales of manufactured goods or services, works) or indirectly obtained, for example, by investing in the development of the company.
Revenue, which is formed from the sum of realizationgoods or services which are not necessarily the real money in the account or in cash. It is made in a supermarket to pay for the goods immediately. Even if you take goods on credit, for you it will pay the bank. The company or the company everything is different. Product or products can be shipped by installments, with payment upon receipt. Or prepaid, which took place a few days before the actual shipment. It can be made and a partial prepayment. Such options are often used in the provision of services.
That is, the time difference between the fact of shipmentthe goods and the receipt of payment for the goods can be significant, sometimes up to several years. Therefore, it is taken into account revenue "for shipping" or "payment". As is clear from the terms, the method of calculation of earnings "for shipping" fixes the time of shipment, the goods leave or services. The fact of payment is not taken into account. The method of accounting for revenue "to pay for" records the time of payment of goods, services or works performed. Most often it is used in enterprises, which is undergoing cash for goods or works, when the product release date coincides with the date of payment.

What is the income

Income means revenues without taking into account (fornet) material costs. In other words, the income includes the profits of an enterprise and labor without material costs for the production of goods or the provision of services.
Revenues divided by main activity andOther income. Activities - all that makes or offers business or company. Other income may represent income from the lease, if the company is losing some of its space for rent. The calculation of the income surplus stocks will be included in the inventory identified or penalties for late payment, or penalties levied with a partner in court.

What profit

Profit is defined as the difference between revenue andall expenses of the enterprise or firm. Profit can be, and it can not be. If revenue is less than the costs of the company after all the payments, then the company will be a loss. The formula is simple definition of profit. From the proceeds deducted the cost of goods or services, and income taxes. Costs, in turn, consists of material costs and labor charges.
The company or firm can deliberately refusefrom part of the profits at some stage of their activities for the sake of entering new markets or promote new products, get rid of unsaleable goods or during the competition. Often, at the stage of growth and expansion of businesses deliberately refuse to profits for the sake of the future prospects.

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