Revenue is the total value of economic benefits an enterprise receives during the accounting period, arising from the enterprise’s normal production and business activities, contributing to increasing equity.”
According to Clause 1, Article 78 of Circular 200, it clearly states:
Revenue is the economic benefit obtained that increases the enterprise’s equity, except for additional contributions from shareholders. Revenue is recorded at the time the transaction occurs, when it is certain that economic benefits will be received, and is determined at the fair value of the amounts entitled to be received, regardless of whether the money has been received or will be received.
Simply put, revenue is all the income (including cash, assets) received from selling goods, providing products/services. Revenue is the income of a business through its economic activities.
What is revenue?
1.2. Meaning and role of revenue
Revenue has a special meaning and role for each business, specifically:
Basis for determining business profits
Profit is determined based on the difference between revenue and costs, so revenue is the basis for calculating profit.
Businesses need to note that high reve 2024 cambodia telegram number library nue does not mean high profit. If a business has high revenue but high costs, then profit is low and vice versa.
Therefore, to determine business efficiency, businesses need to consider revenue along with other
factors such as costs selling prices, and cost of goods sold.
Evaluate the business perfo through software systems that support rmance of the enterprise
Revenue is one of the important indicators to evaluate the business performance of an enterprise, reflecting the total amount of money the enterprise earns from sales and provision of products/services.
However, to comprehensively evaluate oper cg leads ational efficiency, business owners need to consider additional indicators of profit, solvency, profitability, operating costs, etc. to promptly make appropriate business decisions.
Capital for business development and reproduction
Revenue is used to pay salaries to employees and cover expenses to maintain business operations. At the same time, revenue is also used to reproduce, purchase equipment and raw materials to produce new products to develop and expand business scale with the goal of helping businesses develop and increase
competitive advantages in the market.
1.3. What is the difference between revenue, profit and cash flow?
Revenue, profit and cash flow have differences in nature and meaning, specifically as shown in the table below:
Distinguish Revenue Profit Cash flow
Concept Revenue is all income (including cash, assets) received from selling goods, providing products/services. Profit is the final financial result after taking revenue minus investment costs and arising costs. Cash flow or cash flow is the movement of money into or out of a business, project, or financial product.
Nature As an accounting indicator, recorded according to the matching principle. Is a financial indicator to evaluate and forecast the ability and profit potential of a business. Is a financial indicator, recorded according to the principle of actual revenue and actual expenditure.
How to calculate Calculated by the total value of sales and services rendered. Calculated by total revenue minus expenses during an accounting period. Calculated by the total amount of money received and the amount of money spent by a business in an accounting period.
Meaning Shows the scale of business operations of the enterprise. Demonstrates the business performance of the enterprise. Assess the solvency of the business.
