Revenue and receipts. What is the difference between income and profit? What is the difference between income and profit, their features

First of all, let's understand the meaning of such economic categories as revenue, profit and income.

At first glance they seem to be the same thing. But this is not true at all. To successfully start your own business, every entrepreneur must clearly understand the difference between these terms.

The mistake is that many novice entrepreneurs understand this word as everything received at the cash register. IN retail sales, when the buyer pays for the goods upon receipt, this is what happens. But during mutual settlements between counterparty enterprises, the difference between payment for the product and its delivery to the buyer is revealed.

Revenue is the total amount of funds for sold goods sold that must be received by a business entity.

Income

This is an indicator indicating the difference between revenue received from the sale of services and.

Profit

This is the difference between income and the costs of obtaining it. Determines the effectiveness of work. Can be negative when costs exceed revenues.

Species

If we subtract the deductions associated with them from the sum of all income, we get the result. There is also a net one - what remains if all payments of the enterprise are removed from income:

1. Loans.
2. Fines.
3. Taxes.
4. Office rental.

How are revenue, income and expenses determined?

Two methods:

1st – charges “on shipment”. Indicators are calculated at the time of provision of services, performance of work or transfer of goods. This does not depend on payment. The most common method.

2nd – cash register, “on payment”. The indicator is determined when the calculation is made. Suitable for small organizations cash workers – shops retail. The disadvantage is the inability to control accounts payable and receivable. This happens because the receipt of funds is taken into account, but there is no accounting of the work performed by the enterprise, services provided or goods sold.

We examined the most significant performance indicators of any entrepreneur.

Many people do not fully understand what a company’s profit and its revenue are, and what is the difference between these concepts, and if you look deeper, each of these terms has its own subterms: net profit and EBITDA, gross revenue.

Workers in economic specialties (state statistics employees or accountants), when publishing indicators and indicators, imply clearly defined definitions of each term.

They are stipulated in legislative acts, full awareness of which is mandatory for such employees. But since the concepts of revenue and profitability are in the sphere of interests of many non-professionals, an understanding of the essence of the concepts being discussed will be useful.

Revenue- the amount of money or other equivalents that an enterprise receives over a specified period of time of its operation, mostly through the sale of products or services.

It is necessary to distinguish between revenue and income: the latter represents revenue (turnover) minus the cost (or purchase price) of a product or service.

Revenue does not include increases in capital due to increases in the value of the company's assets due to any factor. In the case of calculating the revenue of charitable organizations, it is calculated as the total amount of charitable cash injections received.

Revenue formula

The revenue formula can be presented as follows:

Revenue = cost (or purchase price) + added value
Revenue = sales value * number of units sold

According to the Accounting Regulation number 9/99, revenue recognition occurs subject to the mandatory presence of the following criteria:

1. the enterprise has the right to receive this revenue (which follows from the subject contract);
2. final revenue can be determined;
3. there is confidence that that as a result of a certain transaction there will be an increase in the financial benefits of the enterprise;
4. ownership(use and disposal, possession) of the goods (products) is transferred from the enterprise to the client or the customer has accepted the work (service provided);
5. costs associated with the transaction, can be determined.

The total revenue of the enterprise for the reporting period consists of:

1. Revenue from core activities– amount of money or other assets in in monetary terms, received or that will be received in the future as a result of the sale of products, provision of services at prices and tariffs in accordance with contracts.
2. Revenue from investment activities.
3. Revenue from financial activities companies.

The last two points include:

• financial receipts from shares in the capital of other companies, dividends, bonds and other securities;
• financial proceeds from leasing;
• additional financial income due to the exchange rate delta on foreign currency accounts and transactions in foreign currencies;
• financial proceeds from the revaluation of funds placed in securities, subsidiaries and so on;
• royalties and capital transfers received;
• other financial income from financial activities.

Total revenue consists of revenue in the above three areas, but mainly it consists of revenue from core activities, which, in general, is the whole raison d'être of the company.

Profit– net income from business activity, reflected in cash, which is a delta of the company’s total income and total costs.

Profit (or loss) of a company is a defining indicator that demonstrates financial result.

The Accounting Regulations number 4/99 outlines the process of profit generation and presents its 5 main indicators:

• Clean(retained earnings);
• Profit from operating activities;
• Sales profit— delta of gross profit and distribution costs;
• Profit (or loss) before tax– calculated according to the following scheme: operating income is added to operating profit and operating costs are subtracted, non-operating income is added to this total and non-operating costs are subtracted;
• — equal to the delta of sales revenue (minus VAT, excise duties and other mandatory payments) and the cost of goods sold (in trade sphere the cost price is equal to the purchase price of the goods).

Profit formula

The company's main profit consists of:

1) Profit (or loss) of the main activity- the fiscal result coming from the main activity of the company, it can occur in the form of any forms and varieties, ratified in the company’s charter and not contradicting legislative acts.

The fiscal result is formed separately according to each type of company activity related to the sale of products, execution of work, and provision of services.

It is calculated as the delta of revenue from the sale of products at current prices and the costs of their production and sale.

Pr = Bp - S/s ,

Where Bp- proceeds from sales;
S/s- cost (production and sales costs).

Revenue is calculated without taking into account VAT and excise taxes, which, being indirect taxes, go to the state budget. It also does not include allowances (discounts) provided to dealer and supply companies that participate in the sale of goods.

When recording profits, export companies do not include export duties that go to the country's budget.

2) Profit (or loss) from auxiliary activities– this includes the sale of assets, operating, non-operating and extraordinary income and expenses.

Companies can make a profit or loss that is not related to the sale of goods, works and services. It also includes profit or loss from other sales, namely from the sale of business assets.

For example, a company can sell fixed assets or funds, intangible assets, materials, work in progress, securities and so on.

In addition to profits and losses from other sales (from the sale of property), enterprises also receive non-operating financial results that are not associated with either the sale of goods or the sale of property.

Difference between profit and revenue

1. Count. Revenue, by definition, cannot be less than or equal to zero, but if it is lower, then it means its complete absence. Unlike revenue, profit can have both positive and negative values.
2. Structure. To calculate revenue, it is sufficient to determine the amount of all funds that an individual or legal entity received over a certain period of time. In the case of calculating profits, everything is much more complicated, because first you need to know the amount of all funds received and costs.
3. Real expression. In the case of revenue, it may be “in absentia”, for example, if the company allows deferred payment, giving its customers the opportunity to pay a little later. In the case of profit, such a calculation is inappropriate, because it is calculated only upon payment, when the money is either received in person or into a bank account.
4. Expression. Revenue is a single-digit value, because it consists of the amount of receipts. In turn, profit can have several meanings - be it gross (total) or net (with mandatory payments paid).

Thus, it is necessary to distinguish between the concepts of revenue and profit, since they have different semantic and economic meanings.

Financial relations permeate the life of society, and become successful person Today it is impossible without understanding the essence of the most important economic categories. The concepts of “revenue” and “income” are often confused even by novice businessmen, since in the mass consciousness they are synonymous. In fact, it is very important to understand the difference between them, which will allow you to analyze any economic information more deeply.

Revenue– the amount of money received from the sale of a product or service. It can also be called “dirty” money, since costs are not taken away when calculating the value. Revenue is always either positive or zero, but can never be negative. It is determined either by the cash method (if actual receipt cash), or by accrual (at the time of shipment of goods or provision of services, including with deferred payment).

Income – cash, received by the subject of economic legal relations for a certain period of time. They are formed due to the main activities of the legal or individual, as well as with the help of attracted investments. The concept of “income” largely overlaps with the concept of “profit” and is determined by “pure money”: revenue minus expenses. This is purely economic category, which reflects the current financial condition legal or natural person.

Comparison

So, revenue is a positive value, which only in rare cases can be equal to zero. Receipts are added together to form a certain amount. Income can be negative when the revenue received does not cover the costs of obtaining it. Revenue is generated through the main activities of the enterprise: production (sale) of products or provision of services. Income can be obtained from the company’s assets (renting space, deposits, attracting investments), as well as from core activities (sale of goods and services).

At the same time, revenue is an attribute of an entity actively working in the economic sector. The income may be from a person who, for one reason or another, is not engaged in socially useful activities (student, disabled person, pensioner, unemployed). These funds are generally not subject to income tax. In rare cases, revenue may be equal to profit. This happens in cases where upon receipt there is no consumable part(provision of a certain list of services). However, most often it is revenue that exceeds income in terms of volume.

Conclusions website

1. Formation. The organization’s revenue comes from the sale of goods and services, and income also comes from the sale of shares, attracting investments, and receiving interest on funds placed in a deposit account.
2. Method of origin. The proceeds can only be from an individual or legal entity, leading economic activity. An unemployed person and a student can have income in the form of a scholarship, financial assistance, or allowance.
3. Calculus. Revenue is money received from the sale of goods and services. To calculate income, expenses are subtracted from revenue.
4. Meaning. Revenue is either zero or positive. Income can be negative if the costs of generating revenue exceed the profit received.
5. Ratio. Revenue is always greater than income, and only in rare cases can they be equal.

The terms revenue and profit are considered equivalent by many, but the difference between them is significant. Business.ru explains the difference between profit and revenue and why it is important not to confuse one with the other.

Financial parameters: profit and revenue

The commonality of the terms is that revenue and profit are indicators that characterize the financial condition of the company. However, their meaning is different and they occupy different positions in the structure of the results of economic activity.

The fundamental difference between profit and revenue is the reflection of economic benefits:

revenue shows the volume of sales;

profit accumulates the total financial result of the company’s operation from all sources of income minus full costs;

a high revenue indicator does not indicate high profitability of the business.

Correct display of profit and revenue - important point in maintaining the company's accounting. If you don’t have time to understand the intricacies of financial document management, outsource it to professionals. Glavbukh Assistant specialists will free you from the need to prepare papers, calculate profits and report to the tax authorities.

Revenue generation

The purpose of the indicator is determined from the name itself. The parameter consists of the proceeds from the provision of services, performance of work, sale of goods for the activities specified in the charter as the main one. Other receipts are classified as income.

By what criteria the revenue and profit of an enterprise are recognized in accounting is regulated by the Accounting Regulations PBU 9/99 (Order of the Ministry of Finance of the Russian Federation No. 32n). Revenue is recognized when:

the company has a document-confirmed right to the proceeds, and the rights to the product itself are transferred to the counterparty (the service is provided);

you can determine the amount of receipts and expenses for operations;

the economic benefit of the company increases - the company receives an asset (money, property) or is confident of receiving it.

Proceeds from core activities are generated from sales and accounts receivable. Gross revenue is the proceeds from the sale of goods or services, taking into account taxes payable (VAT, excise taxes). After retaining them, net revenue is formed - a parameter that is necessary to determine profit and profitability.

Some entrepreneurs mistakenly believe that revenue and profit from sales are calculated based on receipts to the current account and to the cash register. In fact, for goods shipped or services provided, funds may be received in installments, on deferred payment terms. In this case, the resulting receivables are also included in revenue for the purposes of accounting. Organizations using a simplified accounting scheme are allowed to recognize revenue based on financial receipts if ownership of the goods has not transferred to the counterparty.

Regardless of the accounting scheme used, simplified or standard, it is better for a qualified specialist to handle the documents in the company. This way you will avoid confusion arising from errors in recording profits. We advise you to pay attention to the Glavbukh Assistant service: with its help you can easily see the benefits of outsourcing accounting. It is convenient, reliable and economical.

The indicator is calculated for the company as a whole and by type of activity: core, financial and investment. According to clause 18.1 of PBU 9/99, revenue over 5% of all income is reflected separately by type. Accounting is kept under credit account 90 “Sales” in the corresponding subaccount. It is important that the revenue indicator cannot be negative - this is another criterion for the difference between profit and revenue.

Our portal has additional material on what mathematical expressions are used to calculate revenue. Examples with specific numbers will help you independently cope with the definition of this financial parameter: “Revenue - formulas and application.”

Determination of profit, types

Unlike proceeds from the sale of funds, profit is not income received from activities, but an increase, an increase in the company’s capital. Sales profit is the difference between sales revenue and the cost of creating the product. The balance can be positive or negative, in rare cases, in the absence of costs, it can coincide with the amount of revenue.

The “profit” parameter has many meanings; small businesses often use the following terms:

Gross – the cost of the work process is included in the calculation. If a company operates in several areas, gross profit is determined by type of activity. The parameter is used for analysis economic efficiency(profitability) general activities and in terms of directions;

Net or balance sheet - all other costs, taxes, fines, interest on loans, etc. are taken into account. This is the financial result of the reporting period according to accounting data.

The result of activity, positive (profit) or negative (loss) for the reporting period, is reflected in account 90 in the sub-account “Profit/loss from sales”. The financial result for the year is summarized on account 99 “Profits and losses”.

How to correctly reflect an indicator in official reporting? Biznes.ru has prepared to help entrepreneurs.

Revenue and profit of the company: application of terms

Let's summarize the comparison of economic parameters: profit and revenue, what is the difference?

Even if you are not going to do your own accounting and tax calculations, understanding the essence of these criteria is necessary for competent communication with tax authorities, partners, as well as for assessing the profitability and success of a business. So, as has been said, a large amount of money received from sales does not equate to commercial success. At the same time, entrepreneurs usually strive to reduce the profit margin in order to reduce the tax burden and increase revenue as positive characterization image, the importance of the company in the eyes of partners.