What Is the Difference between Income and Revenue?

Revenue is the total amount of money generated by a company from selling their products or services. Income represents the total profits, or net income, which generated after subtracting expenses from the revenue. In this article we will discuss the difference between Income & Revenue in detail.

Table of Contents

What is Revenue?

Revenue is the total amount of income generated by the sale of goods or services related to the company’s primary operations. It is sometimes referred to as “gross sales” or “top line” because it is at the top of the income statement.

What is income?

Income is the profit earned after operating expenses have been subtracted from revenue.Income is also referred to as “net income,” “net profit” or referred to as a company’s “bottom line” as it provides a full picture of cash flow in and out of a business.

Comparative Table

Basis	Revenue	Income
Meaning	Revenue is the total amount of money generated by a company from selling their products or services.	Income is the profit earned after operating expenses have been subtracted from revenue (salary, wages, cost of raw material, depreciation, etc.)
Calculation	Revenue is calculated by multiplying number of units sold by its Sales Price.	Income is calculated by subtracting the total costs (includes operating expenses, administrative expenses, etc from total revenue.
Placement	Revenue is placed in the top line of a company’s financial statement.	Income is placed in the bottom line of a company’s Financial Statement
Alternative Names	Sometimes companies use the term top line instead of revenue.	Sometimes companies use the term bottom line instead of income.

Example:

ABC Private Limited Company has sold 20,000 products costing Rs. 50 each during the FY 2019-20. So, the total revenue generated during the year was Rs. 10,00,000.

The total Cost incurred by ABC Private Limited Company includes the operational costs (such as salaries and wages, security, the expense for raw materials, etc.), depreciation, and capital of about Rs 6,60,000. Then the total income or net income will be (Rs. 10,00,000 – Rs. 6,60,000) = Rs. 3,40,000.

Conclusion from the above example

Revenue only shows us how many products the company has managed to sell and the prices at which they are sold but doesn’t depict the utilization of resources in an efficient way.

On the other hand the incomeshows how well the company utilizes its resources and reduces its expenditure and operational costs to increase the company’s income effectively.

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