Revenue Accounts

Revenue is the total amount received by a business or recognized as earned when the business sells something, usually services and goods. In modern accountancy, revenue is recorded when it is earned not when the cash is received from customers. For example when a phone service provider records revenue when calls are made not at the time when you pay the bills. This principle is known as revenue recognition principle.

Types of Revenues

Revenues can be classified as operating revenue and non-operating revenue.

  • Operating revenues are those that originate from main business operations. For example: Sales, etc.
  • Non-operating revenues are earned from some side activity. For example: Interest Revenue, Rent Revenue (except in case where the business' main industry is renting industry).

Revenue Accounts List

Following are the common revenue accounts:

  • Revenue/Sales/Fees: These accounts are used interchangeably to record the main revenue amounts. However most companies/businesses give their revenue account a more specific name like: fees earned, service revenue, etc.
  • Interest Revenue: is used to record the interest earned by the business.
  • Rent Revenue: is the revenue from buildings or equipment of the business on rent.
  • Dividend Revenue: is used to record the dividend earned on the stock of other companies which is owned by the business.

Following accounts are called contra revenue accounts because they have exactly opposite characteristics of revenue accounts. Important contra revenue accounts are:

  • Sales Returns: Sometimes goods are retuned by the customers for some defect or due to some other reason. These are recorded in sales returns account which is a contra sales account.
  • Sales Discounts: This account records the discounts given to customer on the gross amount.

by Irfanullah Jan, ACCA and last modified on

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