Many people think that "profit" and "revenue" is the same thing. However, there are many differences between the two financial concepts. Both "profit" and "revenue" are financial and business terms. Their meanings are close to each other because they are often used in the same context. Both of these terms are used in accounting and economic disciplines.

Revenue is the total amount of money a business earns from its activities, such as the sale of a product or service, but can also be earned indirectly. A business can receive indirect income by investing money in something.

Profit

On the other hand, profit or net income is the money that remains in the business after deducting all costs and expenses from the revenue. Legal costs and expenses include operating expenses ( wage, equipment maintenance, safety, raw material costs and many others), depreciation and capital. Costs can be divided into different types (usually in tandem) and include fixed and variable costs, direct and indirect costs, etc. Profits can be classified as positive or negative (plus or minus).

The difference between revenue and profit

For an ordinary employee, profit and revenue are one and the same. If an employee received a salary, this is his profit and revenue, because all taxes and pension payments are automatically deducted from the employees' wages, so what the employee receives in his hands is the remainder after all deductions.

They are also calculated differently. Profit is calculated by subtracting costs and expenses from total revenue. Revenue is calculated by multiplying the price by the number of units sold.

In economics, profit and revenue have a broader meaning. Economics looks at the profits and income of an entire industry or an entire country. This perspective allows a country or industry to assess growth or decline.

basic information

1. “Profit” and “revenue” are concepts used in business, finance and economics, it is money or its equivalent received by an economic entity (business, companies or governments) or an individual (employees).
2. Both terms are used for different levels: personal, business and national. Accounting, as a rule, uses personal and business level. The economy counts nationally or globally.
3. “Revenue” is generated after a business produces and sells goods and services. Revenue is calculated by multiplying the price by the number of units sold. Profit is calculated after all deductions and expenses are calculated.
4. Profit and revenue are constantly involved in the production cycle. "Revenue" is the starting point for profit, and profit provides cash for the next cycle of production and increase in revenue.

Income - cash or material values received by the company as a result of economic activity (production and sale of goods and services) for a certain period of time.

Firm income- an increase in economic benefits as a result of the receipt of assets (cash, other property) and (or) the repayment of obligations, leading to an increase in the capital of this organization, with the exception of contributions from participants (property owners). Income from ordinary activities is revenue from the sale of goods and services.

There are 3 forms of cash income of the enterprise:

wages as the income of an employee;

profit- as an entrepreneur's income;

percent as income on money capital (borrowed or granted credit).

Each of these forms of income rewards the productive efforts of the corresponding economic entity, ensures the reproduction of the system of economic needs and interests, and together they act as a material source in a market economy, an incentive economic motive for the effective use of labor abilities, means of production (fixed capital), money capital. .

Income there is a monetary assessment of the results of the company (or individual) in the form of a sum of money coming into its direct disposal. Income reflects the economic performance of the company's business activities and is the main source of financial resources. The income of the company consists of two parts:

from proceeds from the sale of products (goods or services). It represents a certain amount of cash from the main activities of the company, the end result of which is manufactured and sold products or services rendered (work performed), paid by the buyer or customer;

from non-operating income , which are side financial receipts of the firm. They are not directly related to the main production activity. Their sources are: dividends on invested shares or acquired shares and other securities; fines received from counterparties; penalties, forfeits, interest for keeping money in a bank and other income.

Distinguish general,average and ultimate income.

Total (cumulative, or gross) income - is the total amount of money received from the sale of a certain amount of goods. It is determined by multiplying the price of a product by the number of units sold.

Average income - this is the proceeds from the sale of a unit of production, i.e., the gross income per unit of products sold. It acts as the price per unit for the buyer and as income per unit for the seller. Average income is the quotient of total income divided by the number of products sold. At a constant price, the average income is equal to the selling price.

Marginal (additional) income is the additional income to the total income of the firm, received from the production and sale of an additional unit of goods. marginal revenue is defined as the difference between the total income from the sale of n + 1 units of goods and the total income from the sale of n goods.

Marginal revenue makes it possible to judge the efficiency of production, as it shows the change in income as a result of an increase in output and sales of products by an additional unit. It also allows you to assess the possibility of payback for each additional unit of output. In combination with the indicator of marginal cost, it serves as a cost guide for the possibility and expediency of expanding the volume of production of a given firm.

Looking at the total, average, and marginal revenues of a firm tells us nothing about the profits the firm is hoping for. Meanwhile, any firm not only expects to make a profit, but also seeks it. maximize. But profit maximization is not based on the principle "the greater the output, the greater the profit." To maximize profits, a firm must produce and sell optimum production volume.

Profit - a positive difference between total income (which includes proceeds from the sale of goods and services, received fines and compensation, interest income, etc.) and the costs of production or acquisition, storage, transportation, marketing of goods and services.

The profit of any firm can be calculated on the basis of two indicators:

1) total income (total revenue) received by the firm from the sale of its products;

2) total costs , which the company bears in the process of production of these products.

Profit = Revenue − Costs (in monetary terms).

According to the volume of distribution costs, there are:

accounting profit - the difference between the amount of income taken into account and what is considered expenses (current costs); then. it is equal to the total revenue minus external (explicit, actual) costs;

economic profit - a more informal indicator - is the remainder of total income after deducting all (including opportunity) costs (external, internal and entrepreneur's normal profit– a minimum wage for remuneration of entrepreneurial functions as an element of internal costs along with internal rent and internal wages); the difference between accounting profit and additional costs, such as: uncompensated own costs of the entrepreneur, not included in the cost, sometimes even “lost profits”, the cost of “stimulating” officials in corruption conditions, additional bonuses to employees, etc.

They also count gross (balance sheet, total) profit and clean profit - remaining after payment of taxes and deductions from gross profit. Economic profit is also sometimes referred to as clean , meaning by this income minus absolutely all costs.

Economic profit differs from accounting profit in that its calculation takes into account the cost of using all long-term and other interest-bearing liabilities, and not just the cost of paying interest on borrowed funds, as is the case when calculating accounting profit. That is, accounting profit exceeds economic profit by the value of opportunity costs or the costs of rejected opportunities.

Economic profit makes it possible to compare the profitability of the invested capital of an enterprise with the minimum return required to justify the expectations of investors, and also to express the resulting difference in monetary units.

Economic profit serves as a criterion for the efficiency of resource use. Its positive value shows that the company has earned more than is required to cover the cost of the resources used, therefore, additional value has been created for investors, founders. In the case of the opposite situation, this indicates that the organization was unable to cover the cost of using the attracted resources. The lack of economic profit can cause capital outflow from the enterprise, and the option of leaving the enterprise from the market is also being considered.

The essence of profit is most fully manifested in its functions .

Profit accounting function comp. that profit is the most important criterion for the effectiveness of a firm's entrepreneurial activity.

Incentive profit function is that profit is a powerful generator of the economy, because the increase in profit depends on the number of products produced, the technical organization of production, sales volume, and the rate of capital turnover.

essence distribution function of profit consists in the fact that it serves as a source of accumulation and development of production, a source of material incentives for workers. In a market economy, profit is the basis for the development of an entrepreneurial firm.

The amount of profit characterizes the success of the entrepreneurial activity, making a profit is usually the main goal and driving motive of all types of entrepreneurship.

Profit is a source of financing for an enterprise, as well as a source of formation of budgets of different levels and a condition for the company to engage in charity work.

Profit is calculated as the difference between income and production costs, where income is an indicator of the financial performance of the enterprise, which reflects all financial receipts of the company, including manufactured and sold products paid for by the customer.

Costs are the costs of producing and selling products.

The profit indicator consists of three components:

• profit from the sale of products is calculated as the difference between the funds received from the sale of goods (revenue) and the full cost of production;
• profit from the sale of various property and material assets;
• profit from non-realization of operations - funds received from the non-core activities of the company (securities, dividends, proceeds from the lease of property and other activities).

If the profit of the enterprise is reduced to zero, then the result economic activity are costs.

Marginal profit is obtained by selling an additional copy of the product.

A high rate of such profit may not always show a really high profit.

It is possible to effectively manage profit only when not only taking into account funds by increasing total cost sales with a stable level of costs, but the maximum amount of profit that can be achieved in the current conditions.

It should be remembered that setting a low price can undermine the profitability of a product or service. Practice decline pricing policy It is recommended for a short time and in a small amount of goods, otherwise, with a large demand for such a product, the profitability of the enterprise as a whole will fall.

In order for a product or service not to fall in price, it is recommended to offer customers simpler analogues. Such a step helps to maintain the price distance and the attractiveness of products.

Types of profit

Profit is classified depending on the conditions of its formation. There are several types of profit.

Depending on the distribution costs:

• accounting- profit received as the difference between the income from the sale and expenses (costs);
• economic- profit received as the difference between accounting profit and additional costs (including costs that are not taken into account in the cost of production).

According to the final result of the company's economic activity:

• normative(provided) - the minimum profit, which allows to ensure the financial stability of the enterprise;
• maximum possible(or minimum allowable) - profit received at minimum cost and maximum revenue;
• unreceived(lost profit) or loss - income that is not received due to violations of an obligation by the other party.

By the nature of taxation:

taxable- profit, which is subject to taxation in accordance with the law, is the difference between the total income from the sale of goods and non-sales operations, excluding losses of the previous period.

Tax free income- income received as a result of operations regulated by Article 251 of the Tax Code of the Russian Federation.

What is income?

Income represents the revenue received for a certain period as a result of the sale of goods and services, excluding material costs. Taxes are also deducted from this amount in accordance with the law.

Under the material costs refers to the amount spent on the production of products. Depreciation of fixed assets, social contributions and other costs, with the exception of wages, are also equated to such costs.

The constituent elements of income are profits and labor costs. The amount of income directly depends on the market value of the goods and market conditions.

Income does not include receipts from individuals and legal entities. If the income is taxable, then the amount that remains after paying the tax is divided into the following components:

• consumption funds - spending on social sphere(compensation of employees);
• investment income - the amount received as a result of investment activities;
• insurance income - the cost of insurance premiums.

Income is classified according to costs.

Marginal revenue is calculated as the amount by which the total income of an enterprise changes after the sale of one unit of a good or service.

The resulting figure reflects the payback of the enterprise.

On its basis, in combination with marginal cost, management decides whether it is rational to expand the firm.

Average revenue shows the level of income received from the sale of one unit of goods. As a rule, this amount is equal to the price of the product. By controlling pricing, a company can regulate its own revenues.

Gross income is the result of a firm's economic activities, calculated as the difference between the cost of goods or services sold and the total cost of production.

What is revenue?

Revenue is the total amount of money received as a result of the sale of goods and services for a certain period of time.

The total revenue consists of the amounts received by the enterprise as a result of the main activity (sale of goods or services), investment activities (sale of non-current assets and securities) and financial activities of the enterprise.

Sales revenue is cash received from the sale of goods and services. It is divided into two types:

• gross proceeds- represents the total amount of proceeds from the sale of goods, services, income from non-sales operations and property;
• net proceeds- cash received after deducting VAT, taxes, discounts and the cost of returned products from gross revenue. It is from these funds that the calculation of dividends and amounts for the development of the enterprise is then carried out.

EBIT profit

Earnings Before Interest and Taxes (EBIT) is an intermediate value between gross and net income, it is income from which interest and taxes have not yet been deducted.

This is also referred to as operating income.

But it's not right. Unlike operating income, EBIT also includes non-operating income. If there are no non-operating income and expenses in EBIT, the indicator will be equal to operating profit.

EBIT is calculated from the income statement and is the sum of profit or loss before taxes and interest payable. A positive EBIT is considered normal.

EBITDA profit

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) depends on the depreciation method. This is the amount of earnings before interest, taxes and depreciation, which shows cash inflows.

Based on EBITDA, the company's debt burden is calculated. To do this, the total liabilities (long-term and short-term debt) are divided by the nominal value of EBITDA.

The value of total liabilities is available for calculations from the Liabilities section of the balance sheet. The normal value of the indicator should not exceed 3. If the value is 4 or more, then the company has a strong debt burden.

When calculating the debt burden indicator, it is necessary to take into account the degree of repayment of receivables. If the receivables are not repaid by buyers, the company loses its solvency, but this fact is not reflected in the indicator itself.

Video on the topic: “Profit and gross income, what is the difference?”

Revenue, income and profit: what is what

It is difficult to assess the effectiveness of an enterprise, the criteria are chosen differently in each case. But always, both in planning and in the analysis of current activities, are used financial indicators. Among the mandatory - revenue, income and net profit. These concepts are often confused.

Revenue

Revenue refers to the funds received for the sale of products or services rendered. There are 2 ways to report revenue:

• cash method;
• revenue accounting.

The cash method assumes that only the money actually received is included in revenue. It shows how much the company already manages. But revenue also includes advances for which the company has not yet fulfilled its obligations.

In accrual accounting, revenue is recorded at the time the goods are shipped or the service is provided. In this case, the indicator shows the volume of sales, but does not take into account the fact that the buyer may be dishonest and will not pay for the purchase.

From the point of view accounting The company's revenue is divided into 2 types:

• gross;
• clean.

Gross revenue - payment received for a product or service sold. Net revenue is gross revenue minus excises, taxes, fees and duties directly included in the cost of goods. It is reflected in binding document- income statement.

The revenue indicator does not reflect the efficiency of the company's work, because revenue can also be found in unprofitable enterprises, but it characterizes the company's market share. To calculate this share, you need to know the sales volumes in the industry for the reporting period.

Income

Income includes all receipts, not just those related to the main activities of the company. This includes interest on deposits or fines and penalties charged.

If the revenue is strictly planned, then the income is unplanned, for example, if the partner violated the terms of the contract and paid a penalty.

Profit

Profit is a basic indicator for assessing the performance of an enterprise. It is she who is primarily interested in shareholders, because dividends are paid out of profits.

Gross and net

Allocate gross and net profit.

Gross profit shows the overall performance of the enterprise. To calculate it, you need to subtract expenses from income for a certain period. From this "pie" the banks and the state will also want their share. Therefore, shareholders of the company pay attention to net profit.

Net profit is what the company works for. It is not necessarily paid in full to shareholders. To calculate net profit, mandatory payments are subtracted from gross profit:

• taxes, fees and fines (that part of the “total” profit that is due to the state);
• interest payments (goes to financial institutions that issued a loan to the company).

The remaining money is called retained earnings. They are reinvested, that is, directed to the benefit of the company. This is an alternative to a bank loan or other external financing. How much money to give in the form of dividends, and how much to spend on development, is decided by the meeting of shareholders.

If the value of net profit is negative, it is called uncovered loss. Until the profit covers the losses, the company does not pay income tax.

EBITDA and EBIT

2 more profit indicators that are not indicated in the financial statements, but are used in financial modeling, when evaluating projects, and are of interest to investors: EBIT - earnings before interest and taxes, and EBITDA - earnings before interest, taxes and depreciation.

The EBITDA parameter was originally devised to calculate whether a firm can repay debts. This parameter, together with the net income indicator, reflects the amount of payments that the firm will make in the term period.

It illustrates the income that the company receives in the current period. It is easy to carry over to future periods, so it is used to assess the return on investment and the possibility of self-financing.

EBITDA allows companies to be compared regardless of type and accounting policy. The comparison is not affected by the size of the investment, the credit burden and the taxation regime.

The main disadvantage of the EBITDA parameter is that it does not take into account that the company will need money to replace equipment due to depreciation. Enterprises that have a large share of costs spent on depreciation (heavy industry, extraction of natural raw materials, construction) try to demonstrate this parameter more often, because their predicted profit is more attractive to investors. Therefore, investors consider EBITDA together with EBIT.

Another disadvantage of EBITDA and EBIT is that the calculation takes into account the results of not only core activities, but also one-time income. This makes it difficult to analyze the company. To get rid of such “information noise”, other income is deducted in the calculations or operating profit is used. This is how the firm's ability to generate cash flow is predicted. But the problem is that these additional transactions can cause financial manipulation, and the figures will eventually turn out to be too high or too low.

Hello! In this article, we will talk about related, but not identical concepts: revenue, income and profit.

Today you will learn:

1. What is included in the revenue of the enterprise;
2. What is the income and profit of the company formed from;
3. What are the main differences between these concepts.

What is revenue

Revenue - earnings from the direct activities of the company (from the sale of products or services). The concept of revenue is found exclusively in business and entrepreneurship.

Revenue characterizes the overall performance of the enterprise. It is revenue, not income, that is reflected in accounting.

There are several ways to account for revenue in an enterprise.

1. The cash method defines revenue as real money received by the seller for the provision of services or the sale of goods. That is, when providing installments, the entrepreneur will receive proceeds only after the actual payment.
2. Another way of accounting is accrual. Revenue from it is recognized at the time the contract is signed or the buyer receives the goods, even if the actual payment occurs later. However, advance payments are not included in such revenue.

Types of revenue

Revenue in an organization is:

1. Gross- the total payment received for the work (or product).
2. Pure- applied in From gross revenue, indirect taxes (), duties, and so on are deducted.

The company's total revenue is made up of:

• Proceeds from core activities;
• Investment proceeds (sales of securities);
• Financial earnings.

What is income

The definition of the word "income" is not at all identical to the term "revenue", as some entrepreneurs mistakenly believe.

Income - the sum of all the money earned by the enterprise through its activities. This is an increase in the economic benefit of the enterprise by increasing the capital of the company by the inflow of assets.

A detailed interpretation of the ways of generating income and their classification are contained in the Accounting Regulation "Income of organizations".

If cash proceeds are funds received by the company's budget in the course of its core activities, then income also includes other sources of funds (sale of shares, receiving interest on a deposit, and so on).

In practice, enterprises often carry out diverse activities and, accordingly, have various channels for generating income.

Income - the overall benefit of the company, the result of its work. This is the amount that increases the capital of the organization.

Sometimes the income is equal in size to the net revenue of the organization, but most often companies have several types of income, and there can be only one revenue.

Income is found not only in entrepreneurship, but also in Everyday life a private person who is not engaged in business. For example: scholarship, pension, salary.

Receipt of funds outside the scope of doing business will be referred to as income.

The main differences between revenue and income are given in the table:

Revenue	Income
The result of the main activity	The result of both main and auxiliary activities (sale of shares, interest on a bank deposit)
Occurs only as a result of conducting commercial activities	Allowed even for unemployed citizens (allowances, scholarships)
Calculated from the funds received as a result of the work of the company	Equal to revenue minus expenses
Cannot be less than zero	Let's go negative

What is profit

Profit is the difference between total income and total expenses (including taxes). That is, this is the same amount that in everyday life could be safely put in a piggy bank.

In an unfavorable situation, and even with big income profit can be zero, or even go negative.

The main profit of the company is formed from the profit and loss received from all areas of work.

Science economics identifies several main sources of profit:

• Innovative work of the company;
• Entrepreneur's skills to orient in the economic situation;
• Application and capital in production;
• The company's monopoly in the market.

Types of profit

Profit is divided into categories:

1. Accounting. Used in bookkeeping. On its basis, accounting reports are formed, taxes are calculated. Explicit, reasonable costs are subtracted from total revenue to determine accounting profit.
2. Economic (surplus profit). A more objective indicator of profit, since when calculating it, all economic costs incurred in the work process are taken into account.
3. Arithmetic. Gross income minus miscellaneous costs.
4. Normal. Necessary income in the work of the company. Its value depends on the lost profit.
5. Household. Equal to the sum of normal and economic profits. Based on it, decisions are made on the use of the profit received by the enterprise. Similar to accounting, but calculated differently.

Gross and net profit

There is also a division of profit into gross and net. In the first case, only the costs associated with the workflow are taken into account, in the second, all possible costs are taken into account.

For example, the formula by which gross profit in trade is calculated is the selling price of a product minus its cost.

Gross profit is most often determined separately for each type of activity, if the enterprise operates in several directions.

Gross profit is used when analyzing the areas of work (the share of profit from which activity is greater), when determining the bank's creditworthiness of the company.

Gross profit, from which all costs (credit interest, and so on) have been subtracted, forms net profit. From it are accrued to shareholders and owners of the enterprise. And it is the net profit that is reflected in and is the main indicator of the business.

EBIT and EBITDA

Sometimes, instead of the understandable word "profit", entrepreneurs meet such mysterious reductions as EBIT or EBITDA. They are used to evaluate the performance of a business when the compared objects operate in different countries or are subject to different taxes. Otherwise, these indicators are also called cleared profit.

EBIT represents profit in the form in which it was before taxes and various interest. It was decided to highlight this indicator in separate category, as it is located somewhere between gross and net profit.

EBITDA is nothing more than profit before taxes, interest and depreciation. It is used exclusively to evaluate the business, its characteristics. It is not used in domestic accounting. for commercial equipment.

Thus, income is the funds received by the entrepreneur, which he can later spend at his own discretion. Profit - the balance of funds minus all expenses.

Both income and profit can be predicted if you take into account revenue for past periods of work, fixed and variable costs.

The differences between profit and revenue are as follows:

The line between concepts may be unclear for an ordinary employee, it does not matter to him how revenue differs from profit, but for an accountant there is still a difference.

Revenue, income and profit: what is what

It is difficult to assess the effectiveness of an enterprise, the criteria are chosen differently in each case. But always, both in planning and in the analysis of current activities, financial indicators are used. Among the mandatory ones are revenue, income and net profit. These concepts are often confused.

Revenue

Revenue refers to the funds received for the sale of products or services rendered. There are 2 ways to report revenue:

• cash method;
• revenue accounting.

The cash method assumes that only the money actually received is included in revenue. It shows how much the company already manages. But revenue also includes advances for which the company has not yet fulfilled its obligations.

In accrual accounting, revenue is recorded at the time the goods are shipped or the service is provided. In this case, the indicator shows the volume of sales, but does not take into account the fact that the buyer may be dishonest and will not pay for the purchase.

From the point of view of accounting, the company's revenue is divided into 2 types:

• gross;
• clean.

Gross revenue is payment received for a product or service sold. Net revenue is the gross revenue minus excises, taxes, fees and duties directly included in the price of the goods. It is reflected in a mandatory document - a profit and loss statement.

The revenue indicator does not reflect the efficiency of the company's work, because revenue can also be found in unprofitable enterprises, but it characterizes the company's market share. To calculate this share, you need to know the sales volumes in the industry for the reporting period.

Income

Income includes all receipts, not just those related to the main activities of the company. This includes interest on deposits or fines and penalties charged.

If the revenue is strictly planned, then the income is unplanned, for example, if the partner violated the terms of the contract and paid a penalty.

Profit

Profit is the basic indicator for assessing the performance of an enterprise. It is she who is primarily interested in shareholders, because dividends are paid out of profits.

Gross and net

Allocate gross and net profit.

Gross profit shows the overall performance of the enterprise. To calculate it, you need to subtract expenses from income for a certain period. From this "pie" the banks and the state will also want their share. Therefore, shareholders of the company pay attention to net profit.

Net profit is what the company works for. It is not necessarily paid in full to shareholders. To calculate net profit, mandatory payments are subtracted from gross profit:

• taxes, fees and fines (that part of the “total” profit that is due to the state);
• interest payments (goes to financial institutions that issued a loan to the company).

The remaining money is called retained earnings. They are reinvested, that is, directed to the benefit of the company. This is an alternative to a bank loan or other external financing. How much money to give in the form of dividends, and how much to spend on development, is decided by the meeting of shareholders.

If the value of net profit is negative, it is called uncovered loss. Until the profit covers the losses, the company does not pay income tax.

EBITDA and EBIT

2 more profit indicators that are not indicated in the financial statements, but are used in financial modeling, when evaluating projects, and are of interest to investors: EBIT - earnings before interest and taxes, and EBITDA - earnings before interest, taxes and depreciation.

The EBITDA parameter was originally devised to calculate whether a firm can repay debts. This parameter, together with the net income indicator, reflects the amount of payments that the firm will make in the term period.

It illustrates the income that the company receives in the current period. It is easy to carry over to future periods, so it is used to assess the return on investment and the possibility of self-financing.

EBITDA allows companies to be compared regardless of type and accounting policy. The comparison is not affected by the size of the investment, the credit burden and the taxation regime.

The main disadvantage of the EBITDA parameter is that it does not take into account that the company will need money to replace equipment due to depreciation. Enterprises that have a large share of costs spent on depreciation (heavy industry, extraction of natural raw materials, construction) try to demonstrate this parameter more often, because their predicted profit is more attractive to investors. Therefore, investors consider EBITDA together with EBIT.

Another disadvantage of EBITDA and EBIT is that the calculation takes into account not only the results of core activities, but also one-time receipts. This makes it difficult to analyze the company. To get rid of such “information noise”, other income is deducted in the calculations or operating profit is used. This is how the firm's ability to generate cash flow is predicted. But the problem is that these additional transactions can cause financial manipulation, and the figures will eventually turn out to be too high or too low.

If you are an active investor who independently researches a company, then you cannot but be interested in such concepts as its income, profit and revenue. But are they synonyms? Can revenue be greater than income? Why can't all expenses be considered expenses? Is it possible to legally reduce profits and why do it? You will find answers to all these questions in this article.

Revenue and income

Income is an inflow of assets or a reduction in accounts payable resulting in an increase in capital. The exception is the contributions of the owners.

According to PBU 9/99 "Income of the organization", two can be distinguished large groups income:

• Income from the main activity (revenue);
• Other income.

The definition of "revenue" in legislative acts is absent. But PBU 9/99 provides examples of receipts that are revenue for various organizations. Based on this list, the following definition can be given.

Revenue is the total amount of claims presented to customers for products sold (or services rendered). At the same time, the sale of these products should be the main activity of the company.

Example. Consider the operation of a retail grocery store.

Revenue is income from the sale of food products.

Income that is not revenue:

• from renting free retail space;
• for the sale of unused warehouse and commercial equipment;
• interest on loans issued to third parties;
• Supplier penalties for breach of contract.

Summarize. Income is a broader concept. In addition to revenue, it includes other income. This means that revenue will always be greater than or equal to revenue.

Profit

If revenue and income reflect the receipt of funds (or a decrease in debt), then profit shows the financial result of the company. In a simplified form, its calculation is as follows:

Profit = Income - Expenses

But in practice, everything is somewhat more complicated.

Why not all expenses can be recognized as expenses

According to Russian laws, all companies are required to pay income tax: under the general taxation system, its rate is 20%. Naturally, few people want to give the state a fifth of their profits - and here the business owner is tempted to write off the maximum possible amount as an expense. For example, write yourself a large cash reward.

To prevent such abuses from occurring, the tax code clearly defines what can be attributed to expenses. In the example with remuneration, it can be attributed to expenses only if the possibility of its accrual is specified in employment contract, the provision on bonuses or in other local regulations. Otherwise, you will also have to pay tax on this amount.

General requirements to the costs are given in Art. 252 of the Tax Code of the Russian Federation. There are two of them:

1. Expenses must be justified, i.e. All expenses must be economically justified. Of course, the business owner can spend money as he wants, but the tax authorities will not deduct such expenses, and tax will be charged on them.
2. Expenses must be documented, and their price must correspond to the market. For example, if a company paid 300 thousand rubles for the repair of the premises, and the average price of such repairs is 100 thousand, then the tax office may have questions.

What is not considered an expense

Article 270 of the Tax Code of the Russian Federation contains a list of expenses that are not taken into account when calculating taxable profit. It does not prohibit making these expenses. However, they will not affect the amount of tax. Such expenses include, for example:

• Dividends paid to shareholders.
• Penalties transferred to the budget.
• Acquisition of shares in other companies.
• Free transfer of property.
• Expenses for the creation or acquisition of property subject to depreciation.
• Contributions to public organizations and trade unions.
• Financial assistance and other remuneration of employees not provided for in employment contracts.

How to legally reduce profits

It would seem that the legislation clearly defines the procedure for recognizing income and expenses. However, there is still room for maneuver, and tax optimization can help the company save significant amounts. Here is just one example of legal optimization.

The organization decides to reconstruct the production building. To do this, a contract is concluded with a third-party company for reconstruction. As a result of the work performed, an object is obtained. Accordingly, expenses cannot be written off in the current period, since the cost of fixed assets is written off by accruing depreciation. It turns out that the organization spent a lot of money, but on paper it still remained profitable, because the write-off of these costs will stretch for many years.

The organization can conclude two contracts with the contractor:

1. For reconstruction. This will include the creation of a project, the dismantling of walls and ceilings, construction works, redevelopment, etc.
2. For repairs. This contract includes painting walls, replacing floors, plumbing, windows, installing equipment, etc.

Nothing can be done about the reconstruction: these costs will have to be written off through depreciation. But the organization will be able to take into account the repair costs immediately after they are made. This will reduce income tax in the current period and leave the saved money in circulation (which actually means receiving an interest-free loan from the state).

And this is not how you can do it

The example from the previous chapter does not violate any law of the Russian Federation and is completely legal. For clarity, we will give an example of an illegal reduction in taxable income.

A manufacturing organization creates its subsidiary in an offshore zone with a zero income tax rate. All manufactured products are sold at cost to their "daughter". That, in turn, is engaged in the implementation of the final consumer. As a result, a company located in the Russian Federation, according to the documents, barely makes ends meet, and a small offshore office makes a huge profit.

Naturally, this method is illegal. Yes, the company has every right to sell its products to anyone, but the tax authorities will very quickly become interested in pricing methods. If the sale price turns out to be significantly lower than the market price, and if the connection between these two companies is revealed, the organizer of such a scheme will be in serious trouble. But it's no secret that connections at the top play an important role in Russian realities.

An example of calculating indicators

Consider, as an example, the reporting of the Magnitogorsk Iron and Steel Works (MMK). The screenshot shows a fragment of his reporting for the first quarter of 2019. Negative values ​​are given in parentheses.

Revenue - $ 1836 million.

Revenue – $1844 million . This included:

• revenue - $ 1836 million.
• other operating income – $3 million.
• financial income - $ 5 million.

Expenses - $1564 million . These include:

• The cost price is $1321 million.
• General and administrative expenses – $51 million
• Selling expenses – $141 million
• Change in expected credit losses – $6 million
• Financial expenses - $7 million.
• Impairment losses and allowance for land reclamation – $2 million.
• Foreign exchange expense – $14 million.
• Other expenses - $22 million.

Taxable income - $280 million ($1,844 million - $1,564 million)

This taxable income was subject to an income tax of $55 million.

Profit for the period was $225 million.

Summing up

Revenue are income from the main activity of the company.

Income is the total income. Thus, income is a broader concept. It can be equal to revenue or be greater than it.

In these definitions, receipts mean not only the receipt of funds, but also the emergence of receivables or a reduction in accounts payable.

Profit is the difference between income and expenses for a certain period. It shows the results of the business and can be both positive and negative (loss).

For a novice investor, it is important not to confuse revenue and profit: the former may well be much larger. In our example, revenue exceeds profit by more than 8 times.



Revenue

(Revenue)

Revenue - the result of the enterprise's activities for a certain, expressed in monetary terms

The concept of revenue, its main forms, calculation of revenue, revenue in accounting, the difference between revenue and profit

Revenue is, definition Revenue and, the main differences between revenue and profit. Revenue and, the main differences between revenue and income Types of revenue Direct counting method Calculation method Methods for determining revenue shipping method Payment method Use of proceeds Sources and links

Revenue is, definition

Revenue is material or other benefits received by the company through the provision of a number of services to its customers or the sale of its products. Revenue is the logical conclusion and result of the activity of any companies commercial as well as non-commercial. Non-commercial firms under revenue understand the total amount of donations and gifts received on their account.

Revenue is the amount of money or other benefits received by the organization for a certain of its activities, mainly due to sales goods or services to their clients.

Revenue is income (in the form of cash or future benefits) from sales goods, work or services. Revenue is the most common measure of a company's financial results.

Revenue is cash received (proceeded) by an enterprise, firm, businessman from the sale of goods and services.

Revenue is money received enterprise for products shipped to customers ( work, services).

Revenue is the gross inflow of economic benefits arising in the ordinary course of the entity's activities for period in the form of capital increases, other than contributions from shareholders.

Revenue is cash receipts from the sale of products on the market.

Revenue as the main source of inflow of material assets of the enterprise

The most important category of accounting and analysis of the company's income, and therefore its profitability and sustainable financial position, is revenue. Revenue ranks highest specific gravity all in all income enterprises. The company's revenue is its main source of formation of the company's own financial resources.

Revenue is the sum of cash receipts for a specific period from the performance of the enterprise. The very same activity of the enterprise is classified into three main areas:

Primary activity;

Investment activities;

Financial activities.

Depending on the direction of the enterprise, the company's revenue is also classified in three areas:

Revenue from core business. Revenue comes from the sale of products (performed works services rendered);

Revenue from investment activities, expressed as a financial result from the sale of non-current assets, the sale of securities;

Revenue from financial activities. This type of revenue includes the result of placing bonds and shares of the enterprise among investors.

Sales revenue is an indicator that characterizes final result production activities of the enterprise. It is defined as the product average price on the number of units sold.

The proceeds from the main activity acts as proceeds from the sale of products (work performed, services rendered) is expressed as a financial result from the sale of non-current assets, the sale valuable papers.

Revenue from financing activities includes the result of placement among investors bonds m shares of the enterprise.

As is customary in countries with a market system of management, the total revenue is the sum of the revenue in these three areas. However, the main value in it is given to the proceeds from the main activity, which determines the whole meaning of the existence of the enterprise. In catering establishments, revenue consists of the amount of products sold own production and the amount of goods purchased. In form No. 2 "Report on financial results", in the declaration of arrived revenue is shown gross as sales revenue. But in statistical reporting, the sales volume is referred to as "turnover" and it consists of retail and wholesale turnover. Income from sales in catering is revenue - the amount of goods sold for sales prices. It consists of cost sold products of own production and purchased goods. Revenue can be: total, including VAT, and net (without VAT).

Revenue and profit, the main differences between revenue and profit.

In the scientific community, it is customary to divide the concepts of "profit" and "revenue". There are many differences between these two financial concepts. Both "profit" and "revenue" are financial and business terms. Their meanings are close to each other because they are often used in the same context. Both of these terms are used in accounting accounting and economic disciplines.

Revenue is the total amount of money that a business receives as a result of its activities, such as the sale of a product or service, but can also be received indirectly. A business can receive indirect income by investing money into anything.

On the other hand, profit or net profit is money that remain in business after deducting all costs and expenses from the proceeds. Judicial expenses and costs include operating costs (, maintenance of equipment, safety, expenses for and many others), and capital. can be divided into different types (usually in tandem) and include fixed and variable costs, direct and indirect costs, etc. Profits can be classified as positive or negative (plus or minus).

In most cases, the concept of profit and revenue mean the same thing. For example, if an employee received salary this is his profit and revenue, because everything and pension payments are automatically deducted from wages employees, so what the employee receives in his hands is the balance after all deductions.

They are also calculated differently. calculated by subtracting costs and expenses from total revenue. Revenue is calculated by multiplying the price by the number of units sold product.

In economics, profit and revenue have a broader meaning. Economics looks at the profits and income of an entire industry or an entire country. This perspective allows a country or industries evaluate the rise or fall.

Main differences:

- "Profit" and "revenue" are concepts used in business, finance and economics, this or their equivalent received by an economic object (business, organization or government) or physical. person (employees);

Both concepts are used for different levels: personal, business and national. Accounting generally uses the personal and business levels to calculate profits and revenues. The economy counts nationally or globally;

- "revenue" is generated after the business produces and sells products and services. Revenue is calculated by multiplying the price by the number of units sold. Profit is calculated after all deductions and cost calculation;

Profit and revenue are constantly involved in the production cycle. "revenue" is the starting point for profit, and profit provides cash for the next cycle of production and increase in revenue.

Revenue and income, the main differences between revenue and income

Differences in the formulations of the concepts of "income" and "revenue" often do not allow one to form a correct idea of ​​them. However, it should be noted that these concepts are different from each other. So, in particular, revenue is the amount of sales of goods (services) at the selling price. Among the inhabitants, it is generally accepted that revenue is the money received by the cashier of the enterprise. This view is due to the fact that every person is a retail customer. In the store, settlements are made with a slight difference in time between receiving the product and paying for the goods. When settling between companies difference in time between shipment (receipt of a product or service) and their payment can take a significant amount of time. As a rule, the revenue from the sale of a product or service is fixed at the time of shipment, regardless of the state payment(prepayment).

The term "income" usually refers to difference between the proceeds from the sale of goods and the initial cost of these goods, both produced and purchased. When determining income from the provision of services, it is considered that revenue is equal to income, since no materials are consumed in the provision of services. AT retail a synonym for income is the term "realized trading".

Sometimes, the terms "income" and "profit" mean the same thing. These concepts should not be confused. Profit is the final result of the company's activities for a certain period of time and is the difference between all income and all costs of the enterprise.

Types of revenue

Revenue from product sales- the most important result of the production, economic and commercial activities of the enterprise, basically corresponds to the "sales volume" indicator accepted in world practice. In the process of production, performance of work, provision of services, a new value is created, which is determined by the amount of proceeds from sales. Sales proceeds are the main source of reimbursement for the funds spent on the production of products (works, services), the formation of cash funds. Its timely receipt ensures the continuity of the circulation of funds, uninterrupted process enterprise activities. Untimely receipt of revenue entails interruptions in activities, reduced profits, violation of contractual obligations, as well as penalties.

Under the proceeds from the sale of products is understood the amount of money actually received on the company's bank accounts, at the cash desk of the enterprise, and other receipts in payment for sold products (works, services) for a given period (month, quarter, year). The proceeds from the sale of products include amounts received for the sale of finished products and semi-finished products of our own production, works and services of an industrial nature, purchased items of trade (previously purchased components and parts for assembly), etc. Revenue depends on the volume of products sold, its range, quality and grade, price level. The timeliness and completeness of receipts from the sale of products contributes to the normal financial condition economic object.

The proceeds from the sale of goods and products indicate the completion of the company's production cycle, the return of the company's funds advanced for production into cash and the beginning of a new round in the turnover of funds.

Revenue is directly related to profit. High profits ensuring debt stability, prosperity and financial stability enterprises. To ensure financial stability, it must have a flexible capital structure, be able to organize its movement in such a way as to ensure a constant excess of income over costs in order to maintain solvency and create conditions for self-reproduction. High income (revenue) is the result of competent, skillful management of the whole complex of factors that determine the results of the economic activity of the enterprise and contribute to an increase in financial results.

Revenue from the sale of pawnshop services- represents the amounts received from the assessment and storage of property accepted in debt security, amounts (interest) received from the provision of short-term loans secured debt security movable property of citizens intended for personal consumption

Gross revenue- the total amount of proceeds from the sale of products, works and services, as well as material assets. The main part of the gross proceeds is the proceeds from the sale of marketable products. In addition, gross revenue includes revenue from other sales, that is, sales of non-industrial products. Gross proceeds are determined in actual selling prices.

The gross proceeds of an economic entity is essentially an impersonal cash receipt that can be used to reimburse current expenses, be placed in, used for capital construction etc.

Sales revenue- revenue from cumulative sales (including sales in ) for a given accounting period, valued at full prices (invoice prices) without accounting discounts granted, product returns, price cuts and other adjustments.

Foreign exchange earnings- foreign currency received from the export of goods and services, as well as from international loans.

Foreign exchange net revenue- proceeds from the sale of something (material values), the currency that remains free to use.

marginal revenue- increase in revenue as a result of the sale of one additional unit of goods.

Hidden revenue- revenue not reflected in accounting or hidden under the guise of unrealized business transactions. The main purpose of concealing the proceeds is either direct theft or its involvement in illegal, unofficial circulation of funds.

Hidden proceeds in foreign currency are considered to be the proceeds not credited to accounts with authorized banks on the territory of Russia, regardless of its reflection in the accounting records of the enterprise, unless otherwise permitted by the Bank of Russia.

Average revenue- the total amount of proceeds from the sale of products, divided by the number of products sold (or the number of products for which it is presented), is equal to the price at which the product is sold, provided that all units of trade items are sold at the same price.

In addition to this, there is also total revenue.

Revenue from product sales

Proceeds from the sale of products (works, services) - the final result of the production activities of the enterprise, the amount received on its account in bank or to the cash desk of funds for products manufactured and delivered to customers, buyers, work performed for them or services rendered. On the industrial enterprise the main, predominant part of the proceeds are funds from the sale of marketable products, i.e., finished items of trade and other products produced for the supply to customers, industrial services to the side. The revenue also includes the amount of funds received from the so-called. other sale, i.e. the sale of the results of non-industrial activities (products of ancillary Agriculture enterprises, factory transport services to the side, etc.). The proceeds also include funds from the sale of inventory items previously acquired by the enterprise and turned out to be redundant due to a change in the production program and for other reasons. However, when evaluating the efficiency of the enterprise, these amounts are not taken into account, since they do not reflect the results of its production activities. The proceeds from the sale are planned by the enterprises and taken into account by them in the current wholesale prices. Its value depends on the quantity, composition of manufactured products and the prices at which it is sold: list (fixed), contractual, which may be higher than the list price, but within established limits, and free, depending on the relationship between demand and supply of goods. From the proceeds from the sale, the enterprise reimburses the costs of production and sale of products (for the purchase of materials and raw materials, fuel and energy, the repair and operation of machinery and equipment, wages, etc.), and the amount remaining after the reimbursement of costs is the profit of the enterprise. With the increase in revenue, the ability of the enterprise to direct more funds to the consumption of the labor collective, wages, and the provision of social and other benefits to employees increases. The larger the revenue, the larger the consumption fund of the enterprise. In world economic practice, the indicator of proceeds from the sale of products corresponds to the indicator of sales in actual selling prices, periodically published in the annual balance sheets of firms.

Terms of sales revenue planning

AT process financial and economic activities, the financial services of the enterprise can carry out revenue planning for the coming year, quarter and operationally. Annual revenue planning is effective in a stable economic situation. In conditions of instability, when the ratio of demand and suggestions confirmed by difficult to predict changes and legally established rules of conduct for legal entities. persons are constantly changing, annual planning is difficult and is not an objective guideline for the enterprise. In such a situation, quarterly planning is more appropriate. Operational revenue planning is used to control the timeliness of the receipt of money for shipped products to the company's cash accounts.

Calculation of planned revenue from product sales

To determine the proceeds from the sale of products, it is necessary to know the volume of sales of products in current prices, excluding VAT, excises, trade and marketing discounts and export tariffs for exported products. Revenue from work performed and services rendered is determined based on the volume of products and the corresponding prices and tariffs. Intermediaries sell these products to retailers at prices that include selling margins. Retailers sell goods directly to consumers at retail prices, i.e. with trade margin. Selling goods at fixed prices, trading companies receive a trade discount.

In a market economy, prices become the most important factor in regulating the production and consumption process and directly affect demand and offer.

The planned revenue from the sale of products is determined by the method of direct counting, multiplying the number of trade items sold by their selling price and adding the amounts received for the entire range of trade items.

The proceeds from the sale of each nomenclature of trade items is determined by the formula:

The volume of sales can be calculated based on the commodity money issue of trade items in the planning period, adding the balances of trade items at the beginning of the planning period and subtracting those at the end of the planning period. The planned sales volume is calculated by the formula:

Realization prices in the planning period are determined on the basis of the prices of the base period, which are adjusted for the expected changes in the planning period, including taking into account demand and suggestions. When the range of trade items is too large, the calculation of the sales plan can be carried out using a combined method. The proceeds from the sale of the main types of products are determined by the direct account method, and to calculate the proceeds from the sale of trade items of another assortment, they use the enlarged method. For calculation take commodity release for the entire range of balances of trade items, add to it the value of balances at the beginning of the planning period and subtract the expected balances at the end of the planning period at free selling prices and at cost.

Proceeds from the sale of products, works and services is the main source of reimbursement of funds for the production and sale of products, the formation of income and the formation of financial resources. According to the market economy, sales volume and revenue are given special attention. The amount of revenue depends not only on reimbursement of expenses and the formation of profits, but also on the timeliness and completeness of tax payments, repayment of bank loans, which affect the level of interest paid, which ultimately affects the financial result of the enterprise.

Revenue from the sale of products is the amount of funds received on the account of the enterprise for the products sold. It is the main source of cash income and financial resources of enterprises. Revenue from product sales is a financial category that expresses monetary relations between suppliers and consumers product.

Direct counting method

The direct count method is based on guaranteed demand. It is assumed that the entire volume of manufactured products falls on a pre-order package. This is the most reliable way to plan revenue when the plan issue of securities and the volume of sales of products are linked in advance with consumer demand, the necessary range and the structure of the emission of products, the corresponding prices are set, then the proceeds from the sale can be determined by the formula:

As a rule, in the conditions of market relations, most enterprises do not have a guaranteed demand for the entire volume of manufactured products. To optimize costs and increase financial results, an enterprise should make efforts to increase the money emission of products, expand its range, and produce goods that are fundamentally new in terms of consumer qualities. In addition, in turn, the number of goods sold will also depend on the price level, and this dependence in practice can be elastic, inelastic and unity with the corresponding elasticity coefficients (Ke): in the first case it is greater than one, in the second it is less, in the third it is unit. The physical meaning of these coefficients is that:

The degree of elasticity has a different effect on the desired value. For example, with elastic demand (Ke>1) AT when the price goes down, it goes up, and when

inelastic (Ke B not

changes because the decrease in price is fully offset by a corresponding increase in the quantity demanded.

Calculation method

In conditions of unstable demand for products manufactured by the enterprise, a calculation method is also used for planning revenue, the basis of which is the volume of products sold, adjusted for input and output balances. Planning revenue from product sales is carried out by analogy with cost planning:

When planning the balances of finished products at the beginning of the planning period, the enterprise does not have comprehensive data on the actual value of the balances, therefore, the expected balances of unsold products are taken into account. Their cost in sales prices is determined using the conversion factor, which is equal to the quotient of dividing the volume of products in the prices of the reporting period

from goods for which the payment deadline has not yet arrived;

from goods shipped but not paid for on time;

· from the goods which are on safe keeping at buyers in a type of refusal of acceptance.

Thus, the amount of revenue may differ significantly from the cost of shipped products.

You can consider in more detail the planning of these factors that affect the timely receipt of revenue for manufactured products.

When planning the balance of unsold products in the warehouse, they proceed, first of all, from their actual availability, and in the absence of current data, from the data as of the last reporting date, and the expected release of marketable products, taking into account its implementation in accordance with existing orders at the beginning of the planning period.

The planning of the balance of goods, the payment term for which has not come, is carried out on the basis of an analysis of the structure, schedules, methods of payment according to

concluded contracts, as well as the established terms of document circulation for intracity and out-of-town settlements, as well as settlements in foreign currency when conducting foreign economic activity. Planning the balance of goods shipped, but not paid on time, goods

in safekeeping with buyers, goods shipped, documents for which have not been transferred to the bank, is based on operational data on the reasons for non-payments and measures taken to reduce them. The balance of finished products in stock at the end of the planning period

are determined based on the need for accumulation to fulfill contractual obligations, the validity of which is outside the planning period, the conditions for implementation and other reasons. When planning revenue from the shipment of unsold products, it is considered

only finished products in stock at the beginning and end of the planning period.

Methods for determining revenue

shipping method

The shipment method implies that revenue is fixed at the time of shipment of goods, services, regardless of the state of payment for them. Revenue from shipment (on an accrual basis) is recognized in tax accounting at the time of transfer of ownership of goods or services, i.e. when the product is sold to the customer. And it does not depend on whether it is paid or not. If the accounting policy for tax purposes uses the option "on shipment", the obligation to determine the tax base arises on the day the goods are shipped. At the same time, the date of transfer of ownership of the specified goods and the day of shipment may not coincide: under the terms of the contract, the ownership of the goods can pass to the buyer after payment for the product, and the seller’s obligation to pay VAT arises at the time of shipment. If the goods are not shipped and are not transported , but there is a transfer of ownership of this product, such a transfer of ownership is equated to the sale of the product.

In modern accounting systems, the "by shipment" method is predominant.

Payment method

When using the “on payment” method (cash method), the company's revenue is fixed at the time of payment for goods, works or services. This method is used in small enterprises where cash settlement is carried out mainly and the date of shipment of goods or services coincides with the date of their payment. Most widely this method also manifests itself in small shopping facilities such as medium-sized shops, small restaurants and cafes.

Disadvantages of the pay-as-you-go method:

The “on payment” accounting system is mainly based on cash and banking transactions, and therefore important assets, such as inventories and property, fall out of the accounting contour. For example. When purchasing equipment, its cost will be written off as expenses and will reduce the profit for the month in which this equipment was purchased. In the future, the equipment will work and generate income, but the cost of purchasing it will be reflected in only one reporting period.

When using the "on payment" method, it is difficult to control receivables and payables in settlements with suppliers and buyers, since the "on payment" system keeps records of receipts and payments of money and does not keep records of shipments of goods.

AT accounting system"on payment" income and expenses may relate to a different reporting period.

For example. Employee salary expenses in January refer to February. Advances for services received will be credited to the month in which payment is received, although the services themselves may be rendered in a different month.

The company's revenue and its place in the system of accounting indicators

Revenue is one of the most important accounting indicators. It is a key profit factor, on the basis of which many financial indicators are built, revealing the profitability of the company, the return on investment, as well as many stock ratios. Based on this, the issues of recognition and measurement of revenue are extremely significant in forming a picture of the financial position of the organization.

For these reasons, the general principles of revenue recognition for financial reporting purposes occupy a central position in the system of accounting rules formed by the requirements of IFRS. In most cases, they are quite clearly formulated by the drafters of IFRS, unambiguous and simple. That revenue recognition has remained unchanged for decades. However, in recent years, more and more use general principles recognition of revenue in some particular cases is considered as distorting the reporting information of companies. This is due, firstly, to the fact that business practices are becoming more complex, with a clear shift in focus from manufacturing to services, where the proper timing of revenue recognition is more difficult to establish. Secondly, specialists in the field of formation and analysis of accounting information note the obvious tendency of managers, whose remuneration is directly determined by the market price of the company's shares and the amount of reported profit, to manipulate accounting rules in order to overestimate profits. Thirdly, there is enough documentary evidence of the readiness of independent auditors to meet such "wishes" of managers, especially in the absence of special rules prohibiting following these wishes. These trends in many cases lead to catastrophic consequences, both for companies and for the audit firms themselves, the significance of which for economic practice is extremely significant.

Here, it should be noted that errors or deliberate distortions of facts related to the recognition of revenue can be divided into two categories: the reflection of legally received revenue in the wrong financial (reporting) period and the recognition of revenue that is actually unearned. Given the periodic nature of reporting, even simple revenue recognition errors can make a huge difference, even though they can be corrected over subsequent reporting periods.

In practice, all cases of erroneous recognition of revenue represent a serious problem for accountants seeking to properly interpret and apply IFRS, including for independent auditors.

Revenue recognition rules for various types of transactions have evolved over a long period of time and have been created in stages by various standards developers in a changing economic environment.

Under current IFRS, revenue from the sale of products or the provision of services can only be recognized when it is “earned”, that is, when the relevant criteria are met. A careful analysis of the rights and obligations of the parties and the risks that they bear at various stages of transactions should be carried out in order to determine the moment of the actual sale and establish the basis for revenue recognition. Where it has the right to return the goods along with a deferred or contingent obligation to pay, or where there is a significant obligation on the seller to complete the transaction, revenue at the time of the initial delivery is not recognised.

Similarly, if there is an implicit or explicit obligation of the seller to buy back the transferred product, the actual sale transaction is not considered to be completed. At the same time, in all cases, the recognition of revenue means demonstrating that the buyer assumes all "ownership risks" in full.

Determination of revenue in the accounting report

The IFRS Principles define revenue as "an increase in economic benefits during the reporting period, in the form of inflows or increases in assets or decreases in liabilities, resulting in an increase in equity that is not related to contributions from equity participants." Revenue includes corporate income and other income. At the same time, revenue is recognized as income from the ordinary activities of the enterprise, characterized, among other things, as income from sales, provision of services, investment income (in the form of interest, dividends), as well as income from the provision of property for use (rent and license payments).

The main issue in accounting for revenue is determining when it is recognized. Revenue is recognized when it is probable (ie "most likely") that future economic benefits will flow to the entity and these benefits can be measured reliably. IAS 18 specifies the conditions under which these criteria are met and therefore revenue is recognised. This standard also contains practical advice on the application of these criteria.

This standard is applied when accounting for revenue from the following transactions and events:

Sales of goods;

provision of services;

Providing for the use by other parties of the assets of an enterprise that brings interest, (royalties) and dividends.

By merchandise, the Standard includes not only property acquired by an entity for resale (for example, goods purchased by a retailer, supplies or other property held for resale), but also own-produced goods held for sale.

The provision of services, according to the Standard, involves the organization's performance of the task stipulated by the contract within a specified period of time, both within one or several reporting periods. Sometimes service contracts are directly related to construction contracts, such as contracts for the services of project managers and architects. The recognition and measurement of revenue arising from the fulfillment of such arrangements is not covered by this Standard, but is accounted for in accordance with the requirements for works contracts in IAS 11 Construction Contracts.

The provision of the organization's assets for use by other parties gives rise to revenue in the form of:

- "interest - a fee that is charged for the use of cash and cash equivalents or from amounts owed;

Royalties - payments for the use of non-current assets of the company, for example, patents, trademarks, copyrights and computer software;

Dividends - the distribution of profits between the owners of share capital in proportion to their share in the capital of a certain class.

Thus, IAS 18 addresses accounting for only a portion of the potential constituents of a firm's revenue, primarily from transactions related to the sale of goods, provision of services, use by other entities, or individuals property of the reporting company, bearing interest, dividends, royalties.

It should be specifically noted that IAS 18 should not be applied to the accounting and reporting of revenue from many contracts and transactions that generate revenue or other income and are governed by other standards, namely:

Under lease agreements (IFRS (IAS) 17 "");

From capital gains on investments and dividends accounted for using the equity method (IAS 28 "in associates");

Under insurance contracts (IFRS 4 "Insurance contracts");

From changes in fair value financial assets and financial liabilities or their disposal (IAS 39 " Financial instruments: recognition and measurement");

From changes in the value of other current assets;

Upon initial recognition and change in the fair value of biological assets related to agricultural activities (IAS 41 "Agriculture");

On initial recognition of agricultural products (IAS 41); and

As a result of the extraction of mineral resources.

Thus, according to IAS 18 "Revenue", revenue is "the gross inflow of economic benefits for a certain period in the ordinary course of an enterprise, resulting in an increase in equity that is not related to contributions from equity participants."

It should be borne in mind that revenue refers only to the gross receipts of economic benefits received and receivable by the organization on its account. Payments received on behalf of a third party, such as taxes on goods and services and taxes on Additional cost, are not economic benefits received by the organization and do not lead to an increase in capital, since they are subject to transfer to the budget. Therefore, they are not included in revenue. Similarly, the agent entity receives gross inflows of economic benefits from amounts collected on behalf of the principal (guarantor) that do not increase the capital of the agent entity. Thus, amounts collected on behalf of the principal are not revenue. Only commissions can be recognized as revenue here.

Methods for calculating revenue in accounting

In accounting, two main methods of calculating revenue are used:

cash method- revenue is considered to be cash payment received on the accounts or in the cash desk of the enterprise or goods received in payment of obligations (barter).

accrual method- revenue is accrued when consumers have obligations to pay for the products or services of the enterprise. Most often, accrual occurs at the time of shipment to the consumer of products or services.

It is divided into several varieties:

Arithmetic. It's about the difference between costs and benefits. Costs are usually different, but income is expressed as gross income, that is, total. Therefore, profit is calculated differently.

Normal. This refers to the normal, necessary income that arises from the conduct of a particular business. The value of this profit depends on the lost profit, that is, the entrepreneurial spirit of the businessman and alternative opportunities for investing capital.

Economic. This refers to the difference between economic costs, which include normal profits, and gross income. It is also called super profit.

Household. This is the sum of economic and normal profits. This is nothing more than the initial base in the process of distribution and use by the enterprise of the profits received.

Accounting. It is calculated according to the following criterion: you need from gross income subtract the explicit costs of the purchase (of external origin). But if implicit costs are subtracted from this type of profit, then the result will be net economic profit.

In accounting, revenue is more often understood not as any proceeds from the sale, but as proceeds from the main activity, i.e. activities for which the company was founded. The remaining receipts are called income and expenses (other income, interest income).

In accordance with accounting rules, revenue is recognized in an amount calculated in monetary terms, equal to the amount of receipt of cash and other property and (or) the amount of accounts receivable. In the financial statements (Profit and Loss Statement), revenue is indicated minus indirect taxes, in particular VAT, which are included in the cost of goods, but are actually withheld by sellers from the buyer for transfer to the budget.

Another feature of the reflection of revenue in reporting is that the amount received from the buyer will not always be full revenue for the organization. So, in commission trade (commission agent) receives from the buyer the proceeds, in which his remuneration is only a small part, and the rest of the amount is subject to transfer to the committent. For the commission agent, only his remuneration will be revenue.

Revenue arises from the organization not only when selling goods for money, but also, for example, when bartering. In this case, revenue is determined based on the cost of goods (values) received or to be received by the company.

Revenue is recognized in accounting under the following conditions (PBU 9/99):

The organization has the right to receive this proceeds (which follows from a specific contract);

The amount of proceeds can be determined;

There is confidence that as a result of a particular operation there will be an increase in the economic benefits of the organization;

The right of ownership (possession, use and disposal) of the product (goods) has passed from the organization to the buyer or the work has been accepted by the customer (the service has been rendered);

The costs incurred or to be incurred in connection with this transaction can be determined.

Generally, revenue is recognized without regard to actual cash receipts (accrual basis). However, for small enterprises, it is possible to take into account revenue as funds are received (cash method).

In the process of production, performance of work, provision of services, a new value is created, which is determined by the amount of proceeds from sales.

Sales proceeds are the main source of reimbursement for the funds spent on the production of products (works, services), the formation of funds of funds, its timely receipt ensures the continuity of the circulation of funds, the uninterrupted operation of the enterprise. Untimely receipt of revenue entails interruptions in activities, reduced profits, violation of contractual obligations, and penalties.

Measuring revenue in an accounting report

Under IAS 18, revenue must be measured in accounting records at the fair value of the consideration received or receivable.

The amount of revenue from a transaction is typically determined by an agreement between the entity and the buyer or user of the asset. It is measured at the fair value of the consideration received or receivable, taking into account the amount of any trade or wholesale discounts provided by the company. Consideration is usually expressed in the form of cash or cash equivalents, and the amount of revenue is the amount of cash or cash equivalents received or receivable. However, the Standard emphasizes that if cash (or cash equivalents) are deferred, the fair value of the consideration should be less than the nominal amount of cash actually to be received.

The standard gives an example when an organization, as a consideration for the sale of goods, provides an interest-free loan to the buyer or accepts from him at an interest rate below the market. Such a transaction is effectively a financing transaction, with the fair value of the consideration determined by discounting all future cash inflows using an implied rate of interest.

In accordance with IAS 39, the difference between fair value (discounted value) and the nominal amount of consideration is recognized as finance (interest) income.

Where the consideration is not cash but is exchanged for goods or services of a similar nature and value, no revenue arises. When exchanging various goods, revenue is measured at the fair value of the goods or services received, less any cash or cash equivalents transferred. If the fair value of the goods or services received cannot be measured reliably, then revenue is measured at the fair value of the goods or services given up, adjusted by the amount of cash or cash equivalents given.

Recall that in accordance with IFRS, fair value is the amount for which a liability can be exchanged or settled in a transaction between knowledgeable, willing parties.

The revenue recognition criteria in IAS 18 Revenue should generally be applied to each entity's transactions on a case-by-case basis. However, under certain circumstances it is necessary to apply them to individual elements of one transaction in order to correctly reflect the sources of revenue. For example, if the sale of a product involves the subsequent servicing of the sold product, the price of which can be determined, the service fee is not recognized at the time of revenue recognition, but is recognized over the period during which the sold product is serviced.

Conversely, however, the recognition criteria may apply simultaneously to two or more transactions when they are linked in such a way that their commercial effect cannot be determined without considering the series of transactions as a whole. The standard gives an example when an enterprise can sell goods and at the same time enter into an additional purchase of these goods in the future, thereby, in essence, leveling the operation, and hence the receipt of revenue. In such cases, both transactions are considered together and can be treated as a financing transaction.

Use of proceeds

If the receipt of revenue to the cash accounts of the enterprise is the completion of the circulation of funds, then its use is both the beginning of a new circulation and the stage of distribution processes, in which the revenue base of budgets of different levels is formed and thereby the national interests are provided, as well as their own financial resources are formed. enterprises.

the proceeds received on the accounts of the enterprise are used primarily to pay the bills of suppliers of raw materials, materials, semi-finished products, components for trade items, spare parts for repairs, fuel, energy. From the proceeds, it is paid, the depreciation of fixed assets is reimbursed, and the profit of the enterprise is formed.

Directions for the use of proceeds are shown in the diagram:

Analysis of the relationship between revenue and profit

The concepts of revenue and profit are different, both in economic sense and in practical reflection. Profit, in principle, reflects the amount of revenue minus all types of expenses. But it cannot be said that profit from revenue depends in direct proportion, since there is a so-called effect operating lever. The effect of operating leverage is that with the growth of sales revenue, profit grows at a faster rate than revenue. This effect is explained by the fact that there are fixed costs in the cost structure.

The effect is calculated as the ratio of gross margin to profit.

Revenue is key concept in business. This is a measure of the performance of any enterprise. To determine it, a number of calculations are required. Many people confuse revenue with profit. However, these are different concepts.

The concept of revenue in simple words

Revenue- this is the income from the activities of the company, the total amount of funds received for the performance of services or the sale of goods. Calculated over a given period of time. Previously, revenue was considered a form of profit. However, this issue is now being disputed by many experts.

IMPORTANT! The activity of the company depends on the amount of revenue. It is the receipt of funds that is the result of the activity of the enterprise. If these funds are very small, the organization is considered unprofitable.

Why do you need to calculate revenue?

This indicator is the most important concept in the company's activities. It is calculated for the following purposes:

• Analysis of the demand for the services provided and the goods sold. Based on the results of the analysis, an entrepreneur can draw up a strategic production plan, determine a procurement plan.
• Based on the amount of revenue, you can get an idea of ​​​​the economic success of the company.
• This is a key indicator of the company's performance. If there is no revenue, this is a sure signal that changes in work are needed.
• Based on the revenue, the cost of the products sold is adjusted, the circulation is determined, for which there will definitely be demand.

The amount of revenue needs to be known, first of all, to the head of the company. But this information can be requested by business partners, creditors, and investors.

Revenue functions

The main function of revenue is to compensate for expenses, funds that were spent on the purchase of goods or on their production. Financial resources received from the activities of the enterprise are credited to the accounts. Timely translations provide:

• stability of the company;
• the continuity of the circulation of goods.

Typically, proceeds are spent on the following purposes:

• payment for the services of providers;
• purchase of products or materials for its production;
• payment of salaries to employees;
• payment of tax fees;
• enterprise expansion.

That is, funds are usually invested in business development and maintenance of its viability.

The receipt of revenue with delays leads to negative effects:

• enterprise losses;
• decrease in profit indicators;
• payment of fines accrued for failure to meet deadlines for loan repayments;
• violation of contractual obligations to business partners;
• inability to pay all bills.

The head of the organization must ensure the uninterrupted receipt of revenue. Without regular and timely receipt of funds, a business cannot exist.

What can be included in revenue?

The indicator under consideration includes:

• the purchase price at which the product was purchased;
• the added value that came with the sale of the product.

That is, revenue takes into account the full price of products sold.

The sources of revenue are:

• The main activity of the enterprise (for example, the sale of goods and the provision of services).
• Investments (work with securities, sale of shares).
• Other financial activities(for example, receiving funds from a company in which the company's investments were previously directed).

The list of sources depends on the specific company and its type of activity.

Calculation example

The store sells washing machines at a cost of 5,000 rubles. 100 washing machines were sold in a month. The cost of household appliances is multiplied by the number of units sold. That is, the store's revenue will be 500,000 rubles per month.

The amount of revenue must be indicated in accounting. This indicator is written in stanza 2110 "Revenue".

IMPORTANT! Revenue is taxable, and therefore tax deductions must be deducted from this value.

How is revenue different from profit?

Revenue is the aggregate of funds received from activities. This value does not take into account the costs of the enterprise. Profit is the difference between revenue and expenses. Expenses are understood as the costs of ensuring the activities of the enterprise. Let's take a look at all the differences:

• Calculus. The amount of revenue can be zero or positive. Profit can take negative values.
• Compound. To obtain information about revenue, it is enough to know all the income of the enterprise from its activities. To calculate profit, you need to know not only the amount of income, but also the amount of expenses.
• Real Expression. Revenue may be potential. For example, the company provides customers with the opportunity to arrange installments. There may not be funds in the company's account, but there is a guarantee of their appearance. Profit "virtual" can not be. It is calculated based on the actual values.
• Expression. Revenue is a definition that can be interpreted in a single sense. Profit can be divided into two forms: gross and net. Net income refers to the amount of income received after paying all taxes.

Profit and revenue differ significantly from each other in a key number of ways.

Example

The company sells phones for 1,000 rubles. We manage to sell 500 phones per month. The revenue is 500,000 rubles. The same company spends certain funds on its activities. They go to pay rent. Monthly rental payments are 50,000 rubles. The company also has to pay salaries to its employees. In total, the salary will be 100,000 rubles.

It is required, firstly, to add up all the costs. They will amount to 150,000 rubles. All expenses are deducted from revenue. The profit will be 350,000 rubles.

Can revenue be negative?

Revenue can be either zero or positive. If all the company's income is missing, the value will be zero. This indicates that the company is not engaged in any activity. This feature is connected with the fact that nothing is deducted from the proceeds. If it is completely absent, then the company does not receive any funds at all.

NOTE! But the profit can be negative. For example, a company sold goods worth 10,000 rubles, and the cost of renting an office is 20,000 rubles. In this case, the organization will go negative by 10,000 rubles.

Revenue is an important concept in running a business. Allows you to determine all the income of the enterprise. Gives an idea of ​​the demand for products or services, the stability of work. Based on it, prices for goods are set, their circulation is determined. It differs from profit in that nothing is subtracted from the indicator under consideration. Usually, funds from the proceeds received go to the needs of the business and ensure its smooth operation.