Difference Between Sales and Revenue
Sales vs Revenue
Both “revenue” and “sales” are relative terms associated with business and are used to indicate profit from a business transaction. Both terms apply to the business aspects of a company, whether a profit company or a non-profit company.
“Revenue” is defined as “the total amount of profit that enters a business or a company as part of a transaction which involves the exchange for a product or a service rendered in a market or business environment.” The revenue encompasses all the profits earned during a certain period of time. Revenue is also the state wherein the company or business costs and expenses are not yet deducted. Factors that determine costs include labor, materials, and other elements. In extension, the company’s income is not yet determined or produced.
Revenue can come in the form of cash or other kinds of equivalents. It is a blanket term for profit that includes: net sales, exchange of assets, interest, and other sources like royalties and investment gains. In a business company perspective, the appropriate term would be “sales revenue.” In a non-profit organization, it is equivalent to “gross receipts.” In the government’s perspective, it would be termed as “tax revenue” (as the tax on the assets comes from taxpayers).
Revenue is one of the important concepts that are published in a company statement or an official tax declaration. In statements and records, it is often referred as the “top line” due to its position on the statement or record. In other uses, “revenue” is also the term the government uses for a profit or increase in assets without underlying or increasing liability.
The calculation for revenue is dependent on the accounting method used in a business or the government.
On the other hand, “sales” is the plural form of “sale,” which is the actual exchange of goods and their corresponding equivalents which are often in the form of cash. A sale is determined by the seller when both parties (the seller and the purchaser) agree to a certain price for a certain good or service. In this particular transaction or exchange, the seller gives the right of ownership to the purchaser when the purchaser exchanges the agreed-upon price or compensation.
They are many methods to conduct a sale. Depending on the product or service, it may come in one form or in many forms. Examples include direct sales, pro forma sales, agency-based sales, sales by traveling methods, business-to-business sales, electronic sales, and indirect sales. Sales are also one of the components that make up revenue. In a company’s profit business, the sales input is often the majority part of the revenue. Other forms comprise the minority of the whole part of the revenue.
1.Revenue and sales operate in the same world of business. “Revenue” is “all the profits gained from conducting exchanges and business transactions” while “sales” are only a part of the whole revenue.
2.The majority of the revenue comes from sales if the environment is a business company and involves business transactions. In other forms of revenue in other environments, like governments and non-profit organizations, sales don’t apply in their counterpart of revenue.
3.There are many methods of achieving sales which depends on the type of product of service that is being offered. 4.Sales in themselves can be considered as the business transactions between a seller and a purchaser. Revenue is only the end results of a sale.
5.Sales support revenues while revenues encompass sales within. In a sense, revenue can exist without sales, but sales automatically turn into revenues. In this picture, sales can also be considered as revenue if other factors are not considered.
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