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Revenue is defined as the price charged to customers for good sold, or services rendered. When goods or services are sold to a customer, the company is either paid in cash, or an accounts receivable is created. The revenue for a given period of time is equal to the inflow of cash and receivables from sales delivered to customers in that same period of time.
The flow of revenue into a company creates an increase in owner's equity, since cash and accounts receivables will increase the total assets of a company. Stated another way, increases to assets of a company will cause an increase to owner's equity. The revenues of a company are reported on the Income Statement. |