This guide provides an overview of the main differences between revenue vs income. Revenue is the sales amount a company earns from providing services or selling products (the “top line”). Income can sometimes be used to mean revenue, or it can also be used to refer to net income, which is revenue less operating expenses (the “bottom line”).
Let’s look at some examples to further illustrate the point. Read through each case below and see if you can determine what you would categorize it as.
Tom’s Pizza Inc sells pizzas, soft drinks, snacks, and dips directly to customers. The customers either pay for the products with a credit card or with cash. At the end of the year, Tom gives his accountant all the receipts from sales, as well as invoices and receipts for all employee wages, supplies, energy, and food/drink costs. His accountant takes all the receipts and tells Tom his ________ is $125,869. The answer is “net income.”
Sara’s Photography Ltd provides a wide range of services, including portrait photos, wedding shots, family photos, and special occasions. She charges clients for these services upfront and at the end of the year, enters all the invoices into a spreadsheet and determines that her _______ is $248,120. The answer is “revenue.”
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