In simple terms, about revenue, income and profit. Income, profit and revenue: what's the difference? What is the difference between revenue and volume of work

Revenue vs profit, what's the difference? In this article in simple terms Let's talk about what each of these concepts is. And what is the difference between them - we will show with an example.

Revenue and profit are important economic concepts. They are among key indicators company activities. To understand how they differ, you need to know how revenue and profit are formed.

What is revenue

Let's first understand what income is. In the economic literature, revenue is the money received from the sale of goods, works or services. Economists calculate this indicator for the organization as a whole, for activities, divisions, types of products, etc.

In accounting, the concept of revenue is disclosed in PBU 9/99. For an accountant, revenue is also income from the sale of goods, the performance of work or the provision of services (clause 5 of PBU 9/99). And it consists of proceeds from ordinary activities:

• cash receipts,
• Receipts of property having a monetary value,
• The amount of accounts receivable.

Unlike economists, an accountant considers not only cash receipts to be revenue. The proceeds may be the receipt of other property, as well as the debts of buyers.

Example

Sfera LLC applies the simplified taxation system and works without VAT. In July 2019, Sfera LLC sold goods to customers for a total of RUB 800,000. Behind goods sold payments from buyers in the amount of 650,000 rubles were received to the current account. Goods worth 150,000 rubles. were implemented with deferred payment, payment for them will be received in August. The accounting revenue of Sfera LLC in July 2019 amounted to 800,000 rubles. Despite the fact that 150,000 rubles. not yet paid.

In the example, we did not accidentally mention VAT. According to clause 3, clause 6 of PBU 9/99, when calculating revenue, taxes, fees and some other amounts are excluded:

• VAT, excises, export duties, other obligatory payments,
• Amounts in favor of the committent, principal, etc. under commission and agency agreements,
• Amounts of prepayment and advance payments,
• Amounts received as a deposit or pledge,
• The amount of debt repayment under credit or loan agreements.

And how in accounting revenue correlates with the income of the company? According to paragraph 4 of PBU 9/99, the company's income is all receipts that lead to an increase in the company's capital. They are divided into:

1. Income from ordinary activities is revenue,
2. Other supply.

That is, revenue is one of the types of company income. The statement of financial results helps to understand this. It is in it that the income of the enterprise is reflected.

Income from ordinary activities, that is, revenue, is indicated in line 2110 of the report. And other income is indicated in other lines:

• Income from participation in other organizations - line 2310,
• Interest receivable - line 2320,
• Other income - 2340.

What is meant by other income? For example, this is income from the rental of temporarily unused property. Or fines and penalties for non-fulfillment of contractual obligations by counterparties.

What is profit

Now let's see what profit is. Profit is the difference between receipts and expenditures aimed at obtaining these receipts. That is, in general view profit is the difference between all the income and expenses of the organization. Moreover, the difference must be positive. If expenses are greater than income, then the difference is negative - this is a loss.

Profit and revenue have two similarities:

• Both revenue and profit are part of the company's revenues,
• When calculating both indicators, the amounts are taken minus VAT, excises and other obligatory payments.

What income and what expenses to take for calculation depends on the type of profit that needs to be determined:

Type of profit	Formula for calculation	Calculation according to the income statement
	Revenue - cost of sales	Line 2110 - line 2120
Sales profit	Gross Profit - Selling Expenses - Management Expenses	Line 2100 - line 2210 - line 2220
Profit before tax	Profit from sales + income from participation in other organizations + interest receivable + other income - interest payable - other expenses	Line 2200 + line 2310 + line 2320 - line 2330 + line 2340 - line 2350
Net profit	Profit before tax - income tax	Line 2300 - line 2410

What is the difference between revenue and profit

Now that we have revealed the concepts of income, revenue and profit, we can say how revenue differs from profit:

• Revenue is all the money that a company receives from ordinary activities: the sale of goods, the performance of work and the provision of services,
• Income is revenue plus other cash receipts. From income, the company pays its expenses and transfers taxes,
• Profit is what remains of income after paying all expenses and taxes. The owners of the company can dispose of this money at their discretion. For example, send it to the development of the organization or take it in the form of dividends.

To understand the difference between revenue and profit, the table will help:

Criterion	Revenue	Profit
	Money from the sale of goods, works and services	Money from sales minus expenses and taxes
Indicator	Is an indicator of the volume of sales	Is the financial result of the company
	Only income is taken into account, excluding expenses.	Accounting for income and expenses
Meaning	Can only be a positive number	Can be positive, zero and negative (loss)
	One indicator is calculated	There are several types: gross, from sales, before tax, net

Revenue and profit, what is the difference: an example

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Let's use an example to show the difference between revenue and profit.

Example

OOO "Omega" is a manufacturer of production equipment. For the third quarter of 2019, the company received the following results (to simplify the example, we do not take into account VAT):

• Products sold for a total amount of 8,500 thousand rubles,
• The cost of goods sold amounted to 5,700 thousand rubles,
• Commercial expenses amount to 850 thousand rubles,
• Administrative expenses - 1,120 thousand rubles.

Also, during the quarter, Omega LLC leased idle production room o received rent in the amount of 800 thousand rubles.

Determine revenue, income and profit:

• The company's revenue amounted to 8,500,000 rubles,
• Income amounted to 9,300,000 rubles. (8,500 thousand rubles + 800 thousand rubles),
• Profit before tax is 1,630,000 rubles. (9,300 thousand rubles - 5,700 thousand rubles - 850 thousand rubles - 1,120 thousand rubles),
• Income tax is 326,000 rubles. (1,630,000 rubles * 20%),
• Net profit is 1,304,000 rubles. (1,630,000 rubles - 326,000 rubles).

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You have to restructure your work due to numerous amendments to the Tax Code. They affected all major taxes, including income tax, VAT and personal income tax.

Profit and revenue are two different concepts, but they accompany the activities of any company constantly. Their meanings are quite close to each other, as they are often used in the same context. But there is a difference between them.

Revenue

The company's revenue is cash receipts from the sale of goods, services or work on the market. It represents the result of the activities of the entire company for a certain period of time. In another way, the revenue is called the gross income of the company.

Revenue is reflected in accounting on account 90 "Revenue", serves to determine the amount of tax paid by companies operating on a simplified taxation regime.

Revenue is the most common measure of a company's performance. However, not everything can be considered revenue. As a rule, these are income from the main activity. When compiling the balance sheet, revenue is taken into account net of indirect taxes, in particular VAT, which is actually withheld from the buyer.

Revenue can be predicted. Based on previous sales and receipts Money, the accountant can predict the expected revenue in the next reporting period. The total revenue of the enterprise for the reporting period consists of:

• Proceeds from core activities (sale of goods, provision of various services or performance of work);
• Revenue from investment activities ( financial results from sale non-current assets or the sale of any securities that are owned by the company);
• Revenue from financial activities companies.

Profit

Profit is an important indicator of a company's performance. It is economic and accounting.

Economic profit - the difference between the total income of the enterprise and the costs (explicit and implicit). This indicator shows how efficiently the company worked in a certain period of time. Economic profit can be distributed among the founders. Accounting profit- profit used for accounting purposes. Taxes are deducted from it, and it is reflected in the Profit and Loss Statement. It is equal to the difference between the total income and the explicit costs of the enterprise.

The main profit of the organization consists of indicators:

• Profit (or loss) from the main activity (sales of products, provision of services or performance of work);
• Profit (or loss) from ancillary activities (for example, profit from renting a warehouse or performing additional work under a contract).

The relationship between profit and revenue is that profit is the difference between the total revenue and the total costs of the enterprise. Profit can be negative (loss), while revenue is not.

Based on the performance of past periods, the accountant can predict future profits. To make such a forecast, it is necessary to take into account not only expected income (future revenue), but also expected expenses, as well as market conditions and predicted changes in the market.

The main goal of the financial and economic activities of each commercial organization is to make a profit, which is one of the key indicators of such activities (Article 50 of the Civil Code of the Russian Federation). Also, one of the main indicators of the company's activity is its revenue. What is the difference between revenue and profit, we will consider in this consultation.

Revenue, profit and income: what is the difference

In order to answer the questions of how income differs from revenue and profit, and also how revenue differs from profit, let's look at how revenue and profit are formed.

The income of the company is recognized as receipts of cash, other property and proceeds from the repayment of obligations that lead to an increase in the capital of this organization, with the exception of contributions from its participants (clause 2 PBU 9/99).

The organization's income is divided into income from ordinary activities and other income (clause 4 PBU 9/99).

The company's income from ordinary activities is the proceeds from the sale of goods, income from the performance of work or the provision of services (clause 5 PBU 9/99).

Revenue consists of the amount of cash received, other property calculated in monetary terms, and the amount of receivables (in the part not covered by receipts) from the company's main activity, with the exception of the following receipts (clause 3, clause 6 PBU 9 /99 ):

• amounts of VAT, excises, export duties and other similar obligatory payments;
• amounts under agency agreements, commission agreements and other similar agreements in favor of the committent, principal, etc.;
• amounts received in the order of advance payment for goods, works, services;
• sums of advances on account of payment for goods, works, services;
• deposit;
• amounts received as a pledge, if the agreement provides for the transfer of the pledged property to the pledgee;
• amounts received as repayment of a loan, a loan granted to a borrower.

In addition to income in the form of proceeds from the sale of goods, the performance of work and the provision of services for the main type of activity, the organization's income is also other income from the conduct of other types of activities (investment, financial), with the exception of the income specified in paragraph 3 of PBU 9/99 (clause 4 PBU 9/99).

In particular, other income includes income from the provision of one's property for temporary use for a fee; proceeds from participation in the authorized capital of another organization; interest on granted credits and loans; fines and penalties for violation of the terms of contracts (clause 7 PBU 9/99).

That is, income is not revenue or profit. These are all receipts that lead to an increase in the capital of the company.

The profit of the company is defined as a positive difference between the income received (which includes proceeds from the sale of goods and services, income from the rental of property, interest income, fines received, etc.) and the expenses incurred to obtain these incomes.

What is the difference between revenue and profit (in simple words)

So, income is revenue from the sale of goods, performance of work, provision of services, as well as other non-operating receipts (clause 4, clause 5 PBU 9/99, clause 1 of article 248 of the Tax Code of the Russian Federation, clause 1 of article 249 of the Tax Code RF).

The difference between revenue and profit is as follows.

Revenue is the volume of sales, the amount of money received from the sale of manufactured or previously purchased products, services rendered, work performed (Article 249 of the Tax Code of the Russian Federation).

Profit is a part of income (including proceeds from the sale of goods, works, services) remaining after reimbursement of costs aimed at obtaining it (Article 247 of the Tax Code of the Russian Federation).

Unlike profit, revenue cannot be negative or zero.

Let's explain with an example. The organization sold goods for 100,000 rubles per month. This is the income of the organization. The cost of purchasing these goods amounted to 50,000 rubles. Other expenses of the organization per month - 20,000 rubles. Then the profit of the organization for the month will be:

100 000 rub. - 50,000 rubles. - 20,000 rubles. = 30,000 rubles.

First of all, let's understand the meaning of such economic categories as revenue, profit and income.

At first glance, it seems to be the same. But that's not the case at all. For a successful start own business every entrepreneur must clearly understand the difference between these terms.

The mistake is that many novice entrepreneurs understand this word as everything received at the cash desk. In retail, when the buyer pays for the goods upon receipt, this happens. But in mutual settlements between counterparty enterprises, the difference between paying for the product and delivering it to the buyer is revealed.

Revenue - a set of funds for the sold goods sold, which must be received by a business entity.

Income

This is an indicator indicating the difference between the revenue received from the sale of services, and.

Profit

It is the difference between income and the cost to generate it. Determines performance. Can be negative when costs exceed revenues.

Kinds

If we subtract the deductions associated with them from the sum of all incomes, we get as a result. There is also a net one - what remains if all payments of the enterprise are removed from the income:

1. Credits.
2. Penalties.
3. Taxes.
4. Office rent.

How revenue, income and expenses are determined

Two methods:

1st - accruals "on shipment". The indicators are calculated at the time of the provision of services, performance of work or transfer of goods. It does not depend on payment. The most common way.

2nd - cash, "on payment." Determine the indicator when the calculation is made. Suitable for small organizations working for cash - shops retail. The disadvantage is the inability to control accounts payable and receivable. This happens because the receipt of funds is taken into account, but there is no accounting for the work performed by the enterprise, services rendered or goods sold.

We examined the most significant performance indicators of any entrepreneur.

We recently conducted a study and found that more than 50% of our clients in small and micro businesses do their own bookkeeping. The advantages are obvious - savings. There may not be any cons if the entrepreneur understands financial and accounting. Sometimes this is critical.

Here is a real-life case that illustrates well the importance financial literacy entrepreneur. Once, when filling out the balance sheet, the business owner indicated the balance of funds in the account, the cost of goods, the amount of receivables and payables, and in fixed assets wrote the words: “Nissan”.

Do you think that the entrepreneur's assets and liabilities converged, and what would the tax authority say about this?

Confusion in terms can lead to overpayments or arrears, which threaten tax penalties. Everyone should understand well and be able to distinguish from each other the main indicators of financial activity: revenue, profit, income, turnover and turnover.

Revenue, income and gross profit

Revenue- the amount of money received from the sale of goods, works, services. It can be determined by the “on shipment” method, that is, at the time of actual shipment of the goods or the provision of services, or it can be by the “cash” method, that is, at the time of receipt of payment. In addition to funds received directly from the sale of goods and services, it may also include income from the sale of valuable assets and other receipts.

According to the accounting regulations income An organization recognizes an increase in economic benefits as a result of the receipt of assets (cash, other property) and (or) the repayment of liabilities, leading to an increase in the capital of this organization, with the exception of contributions from participants (property owners)”.

Revenue is an indicator of financial well-being and the starting point for calculating the profit of an enterprise. It can be zero or positive, but never negative.

The concepts of "revenue" and "turnover" are generally identical. At the same time, “turnover” can often be used to refer to the non-cash turnover of the company, that is, the receipt of funds to the settlement account for goods, works and services sold.

In any case, both revenue, and income, and turnover are "gross" characteristics that do not take into account the costs (expenses) of the company.

Gross profit equal to the difference between revenue and expenses (costs) for the main activity (cost of goods or services sold). The financial result, which takes into account expenses in all areas of the company's activities, is called net profit (positive financial result) or net loss (negative).

Company turnover, trade turnover and revenue

Often confusion arises in the concepts of "turnover" and "turnover". We have already found out that turnover companies are the money that an enterprise has, this term refers to the economy. Turnover is a concept from the field of accounting, it denotes the amount of funds received from the sale of goods or services.

Trade turnover should be distinguished from proceeds - in addition to direct income from trade, it may include other types of income and income from the sale of property. Thus, the revenue can be either greater than the turnover, or equal to it.

In addition, it is important whether you calculate revenue on an accrual basis or on a cash basis. As mentioned earlier, in the first case, income or expenses are taken into account in the period to which they relate, in the second - when they are directly paid. If the sale is made in installments or deferred payment, then, in the case of cash settlement, revenue and turnover may also differ.

The difference between profit and turnover

If there is nothing wrong with calling revenue turnover, then it is very important to distinguish profit from turnover, for example, in order not to overpay income tax.

Thus, the concept of "turnover" characterizes how much money the company has in principle, and profit is how much money the company can invest in its own development.

The difference between expense and loss

Expenses are all the money a company spends to produce and sell its product. These include material costs, salaries and other payments to employees, the cost of repairing equipment and premises, rent, taxes.

When expenses exceed the income of the company, there is a loss.