Income statement

Revenue

Value earned by selling goods or providing services—not necessarily cash already received.

01

Technical definition

Income earned from an entity's ordinary activities by delivering promised goods or services.

02

How it works

Revenue increases equity through profit and is recognized when the relevant performance obligation is satisfied. It may arise before, with or after cash collection.

03

Everyday example

A completed $800 service creates revenue even if the customer pays next month.

04

Common pitfall

Customer prepayments are usually liabilities until the promised performance is delivered.