A company's revenues are amounts it has earned as the result of business activities such as selling merchandise or performing services. Under the accrual method of accounting, revenues are reported on the income statement in the period in which they are earned even when a dependable customer is allowed to pay 60 days later. In this example, when the revenues are earned the company will credit a revenues account and will debit the asset account Accounts Receivable.
A company's receipts usually refers to the cash that it receives. The following are examples of receipts which are not revenues:
- borrowing $1,000 in cash from the bank
- collecting an account receivable from a customer who had purchased goods on credit 30 days earlier
- disposing of a company vehicle and receiving cash that is equal to the vehicle's book value
- receiving $1,000 from an employee who had borrowed $1,000 from the company several weeks earlier
- receiving cash from an investor for new shares of the company's common stock
When a company makes a $200 cash sale (or performs services for $200 of cash) the company will have both $200 of revenues and $200 of cash receipts.
