Revenues are the amounts that a business earns from selling goods or providing services to its customers. For example, a retailer's revenues will include its sales of merchandise, a law firm's revenues will include the fees it earns from providing legal services to its clients, and a bank's revenues will include the interest that it earns on the loans to borrowers.
Under the accrual method of accounting, revenues are reported on the income statement for the period when the revenues were earned (not the period when the cash is received). This means that revenues can occur before the cash is received, after the cash is received, or at the same time that the cash is received. Hence, revenues are different from cash receipts.
Revenues are often sorted into two categories: operating revenues and nonoperating revenues. Operating revenues pertain to a company's main activities. For instance, a retailer's operating revenues could include sales of merchandise, sales of extended warranties, and repair revenues. Nonoperating revenues pertain to a company's incidental activities. This means that a retailer's nonoperating revenues will include the interest and the rent that it earns on its investments.
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