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Accounts

Revenue

Revenue is income earned from a business's ordinary activities before subtracting expenses.

Reviewed by the Booksmrt bookkeeping teamLast reviewed 2026-07-27

How it works in the books

The timing of revenue depends on the accounting method and the nature of the transaction. Revenue is not always equal to deposits because deposits may include loans, owner contributions, sales tax, or collections from earlier periods.

Example

A $10,000 customer deposit may include $9,200 of sales and $800 of sales tax payable rather than $10,000 of revenue.

What can go wrong

Coding every incoming bank deposit to sales can materially overstate revenue.

Compare Revenue

Revenue vs. cash receivedRevenue describes what the business earned; cash received describes money that moved. They can differ because of accounting method, receivables, customer deposits, sales tax, transfers, loans, and owner funding.

Sources

Educational information only. Booksmrt provides bookkeeping services, not tax, legal, audit, or investment advice. Confirm material accounting and tax decisions with the appropriate professional.