What is Revenue and Expenses in Accounting

What is Revenue

In this post, students will learn what is revenue and expenses in accounting. First Revenue has been explained in this post, and later Expense. So keep in touch with this post.

 

Formal Definition of Revenue

The gross increase in owner’s equity (capital) resulting from the operations and other activities of business.

 

Informal Definition of Revenue

Amounts a business earns by selling services and products. Amounts billed to customer for service and/or products.

 

Types of Revenue in Accounting

 

Sale of Products

Amounts earned from the sale of merchandise.

Sale of Services

Amounts earned from performing services.

Rental income

Amounts earned from renting properties.

Interest Income

Amounts earned from investments.

 

You May also Read: What is Liabilities in Accounting and Its Types

 

What are Expenses in Accounting

 

Formal Definition of Expenses

Decrease in capital arising from the cost of goods, fixed assets, and service and supplies consumed in the operations of a business.

Informal Definition of Expenses

Expenditure of doing business. The equipment and other things used in business and had charge to business.

Additional Explanation of Expenses

Some examples of personal expenses that most individuals are familiar with are utilities, salaries and wages, advertising, building rental, and utilities.

 

Types of Expenses in Accounting

 

Supplies

Expenditures for incidental materials needed in the conduct of business, such as office supplies.

Salaries

Expenditures for work performed by employees.

Payroll Taxes

Expenditures for taxes based on wages paid to employees.

Advertising

Promotional expenditures, such as newspapers, handbills, television, radio, and mail.

Utilities

Expenditures for basic services needed to function in the modern world, such as water, sewer, gas, electricity, and telephone. Most businesses track the amount spent for each type of utility service.

Building Rental

Expenditures paid to an owner of property (building) for use of the property. A rental agreement called a lease contains the terms.

Maintenance & Repairs

Expenditures paid to repair and or maintain buildings and/or equipment.

Dear Students Explorer

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