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book as income vs. book as revenue

English translation: income is not the same as revenue

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08:36 Jan 22, 2003
English to English translations [PRO]
Bus/Financial / annual accounts
English term or phrase: book as income vs. book as revenue
Can anyone explain the difference (if any) between "book as income" and "book as revenue"? My economic dictionary suggests both for the same term... Any differences between American and British usage? References would be appreciated!

TIA
Barbara Østergaard
Denmark
Local time: 23:08
English translation:income is not the same as revenue
Explanation:
Revenue generally means that you have sold something, whereas you normally generate income without having to have sold anything (e.g. income from investments - such as dividend payments).

Barron's dictionary of accounting terms has:

income
1. money earned during an accounting period that results in an increase in total assets
2. items such as rents, interest, gifts and commissions
3. revenues arising from the sales of goods and services
4. excess of revenues over expenses and losses for an accounting period (i.e. net income)

Revenue
1. increase in the assets of an organization or decrease in liabilities during an accounting period, primarily from the organization's operating activities. This may include the sale of products (SALES), rendering of services (revenues) and earnings from interest, dividends, lease income and royalties.
2. in GOVERNMENT ACCOUNTING, the gross receipts and receivables from taxes, customs, etc., without consideration of appropriations and allotments.

HTH

Alison

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Note added at 2003-01-22 09:09:11 (GMT)
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See also (from www.investorwords.com)

\"income
Definition 1

For corporations, revenues minus cost of sales, operating expenses, and taxes, over a given period of time. Income is the reason corporations exist, and are often the single most important determinant of a stock\'s price. Income is important to investors because they give an indication of the company\'s expected futuredividends and its potential for growth and capital appreciation. That does not necessarily mean that low or negative earnings always indicate a bad stock; for example, many young companies report negative income as they attempt to grow quickly enough to capture a new market, at which point they\'ll be even more profitable than they otherwise might have been. also called earnings.

Definition 2

For individuals, money earned through employment and investments.\"

and

\"revenue
Total dollar payment for goods and services that are credited to an income statement over a particular time period. Revenue figures will usually be net of discounts or any payments that are returned to the customer or client. By subtracting expenses from revenue, a company\'s net income can be calculated. In terms of reporting revenue in a company\'s financial statements, the question of when revenue should be considered received (or \"recognized\") is sometimes not clear. For example, revenue could be recognized when the deal is signed, when the money is received, when the services are provided, or at other times. There are rules specifying when revenue should be recognized in different situations, and in general, companies should recognize revenue only when the good or service is fully transferred over to the customer/client, and when the amount of revenue to be received can be reliably determined. \"

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Note added at 2003-01-22 11:24:03 (GMT)
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The problem is more compley than just US/UK usage. For example, even the International Accounting Standards Board (a UK institution) differentiates between income and revenue as follows in its 2001 version of the International Accounting Standards:

Income
Increases in economic benefits during the accounting period in the form of inflows or enhancements of assts or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants

Revenue
The gross inflow of economic benefits during the period arising in the course of ordinary activities of an enterprise, when those inflows result in increases in equity, other than inflows relating to contributions from equity participants

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Note added at 2003-01-22 11:27:52 (GMT)
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What does the above blurb from the IASB mean?

Income: Can be from sales, but can also be from an asset appreciating (if the price of a property the company owns goes up if the market shifts), or if the amount of a liability falls (a bill in a foreign currency suddenly becomes worth a lot less because the exchange rate shifts). It does not relate to direct equity investments in the company.

Revenue:
Stems from ordinary activities - which is generally the sale of products or services.
Selected response from:

Alison Schwitzgebel
France
Local time: 23:08
Grading comment
Thank you both for excellent explanations and references. You both deserve the points!
4 KudoZ points were awarded for this answer



Summary of answers provided
4 +3income is not the same as revenue
Alison Schwitzgebel
5British Usage
Peter Coles


  

Answers


15 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +3
income is not the same as revenue


Explanation:
Revenue generally means that you have sold something, whereas you normally generate income without having to have sold anything (e.g. income from investments - such as dividend payments).

Barron's dictionary of accounting terms has:

income
1. money earned during an accounting period that results in an increase in total assets
2. items such as rents, interest, gifts and commissions
3. revenues arising from the sales of goods and services
4. excess of revenues over expenses and losses for an accounting period (i.e. net income)

Revenue
1. increase in the assets of an organization or decrease in liabilities during an accounting period, primarily from the organization's operating activities. This may include the sale of products (SALES), rendering of services (revenues) and earnings from interest, dividends, lease income and royalties.
2. in GOVERNMENT ACCOUNTING, the gross receipts and receivables from taxes, customs, etc., without consideration of appropriations and allotments.

HTH

Alison

--------------------------------------------------
Note added at 2003-01-22 09:09:11 (GMT)
--------------------------------------------------

See also (from www.investorwords.com)

\"income
Definition 1

For corporations, revenues minus cost of sales, operating expenses, and taxes, over a given period of time. Income is the reason corporations exist, and are often the single most important determinant of a stock\'s price. Income is important to investors because they give an indication of the company\'s expected futuredividends and its potential for growth and capital appreciation. That does not necessarily mean that low or negative earnings always indicate a bad stock; for example, many young companies report negative income as they attempt to grow quickly enough to capture a new market, at which point they\'ll be even more profitable than they otherwise might have been. also called earnings.

Definition 2

For individuals, money earned through employment and investments.\"

and

\"revenue
Total dollar payment for goods and services that are credited to an income statement over a particular time period. Revenue figures will usually be net of discounts or any payments that are returned to the customer or client. By subtracting expenses from revenue, a company\'s net income can be calculated. In terms of reporting revenue in a company\'s financial statements, the question of when revenue should be considered received (or \"recognized\") is sometimes not clear. For example, revenue could be recognized when the deal is signed, when the money is received, when the services are provided, or at other times. There are rules specifying when revenue should be recognized in different situations, and in general, companies should recognize revenue only when the good or service is fully transferred over to the customer/client, and when the amount of revenue to be received can be reliably determined. \"

--------------------------------------------------
Note added at 2003-01-22 11:24:03 (GMT)
--------------------------------------------------

The problem is more compley than just US/UK usage. For example, even the International Accounting Standards Board (a UK institution) differentiates between income and revenue as follows in its 2001 version of the International Accounting Standards:

Income
Increases in economic benefits during the accounting period in the form of inflows or enhancements of assts or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants

Revenue
The gross inflow of economic benefits during the period arising in the course of ordinary activities of an enterprise, when those inflows result in increases in equity, other than inflows relating to contributions from equity participants

--------------------------------------------------
Note added at 2003-01-22 11:27:52 (GMT)
--------------------------------------------------

What does the above blurb from the IASB mean?

Income: Can be from sales, but can also be from an asset appreciating (if the price of a property the company owns goes up if the market shifts), or if the amount of a liability falls (a bill in a foreign currency suddenly becomes worth a lot less because the exchange rate shifts). It does not relate to direct equity investments in the company.

Revenue:
Stems from ordinary activities - which is generally the sale of products or services.

Alison Schwitzgebel
France
Local time: 23:08
Native speaker of: Native in EnglishEnglish, Native in GermanGerman
PRO pts in pair: 92
Grading comment
Thank you both for excellent explanations and references. You both deserve the points!

Peer comments on this answer (and responses from the answerer)
agree  Dolly Xu
5 mins

agree  xxxEDLING
1 hr

agree  Antonio Camangi
9 hrs
Login to enter a peer comment (or grade)

2 hrs   confidence: Answerer confidence 5/5
British Usage


Explanation:
The following definitions come from the Shorter Oxford Dictionary.

Income: The (amount of) money or other assets received or due to be received from employment, business, investments, etc., esp. periodically or in the course of a year.

Revenue: Income, from property, possessions, or investment, esp. of an extensive kind.

As you can see the distinction that Alison makes doesn't really exist for us in the context of annual accounts.

We normally use "turnover" as a title for all monies recieved during an accounting period, and "profit" for what's left when certain expenses have been accounted for e.g. "trading profit", "operating profit", "profit before tax and interest". So we don't have a lot of use for "revenue" or "income" other than as general descriptive terms in explanatory narrative where their meaning is generally clear from the context, and in any case they are often accompanied by a qualifier e.g. "sales revenue".

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Note added at 2003-01-22 11:01:16 (GMT)
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As a general and unreferenced observation about American usage of these terms (from the perspective of a confused foreigner! who spent 7 years working for a large American finance institution) ...

\"revenue\" generally seems to be clear - referring to the total amount of money coming into a company during an accounting period.

\"income\" seems to be used ambiguously - sometimes in the same way as \"income\", but sometimes in the same way as we Brits use \"profit\".

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Note added at 2003-01-22 11:02:41 (GMT)
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Sorry the last sentence should read ...\"sometimes in the same way as \"revenue\", ...

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Note added at 2003-01-22 11:05:01 (GMT)
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Irrespective of how \"income\" and \"revenue\" are being used, \"book as ...\" simply means \"record for accounting purposes as ...\".

Peter Coles
Local time: 22:08
Native speaker of: Native in EnglishEnglish
PRO pts in pair: 47
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