What is revenue?

By Book Keeping Pros
Sources checked 15 Oct 2026

Definition

Revenue is the total a business earns from selling its goods or services, plus other income such as interest, before any expenses are taken away. It is the first line of the profit and loss statement and is also called turnover. Revenue shows how much business came in, not how much the business kept.

Revenue is not profit. Profit is what remains once expenses are taken from revenue, so a business can grow its revenue and still make a loss if its costs rise faster.

Not every deposit is revenue. A bank loan, money the owner puts in and a refund from a supplier all raise the bank balance, but none of them is income the business has earned, so each is recorded in a different kind of account.

Revenue is usually recorded net of what the business gives back. Discounts, refunds and credit notes issued to customers reduce sales, either directly or through a separate sales returns account, so the profit and loss statement shows what was actually earned. Keeping a separate income account for each main stream, such as product sales, service fees and interest, shows where the money comes from and makes a change in one stream easier to spot.

In Australia

business.gov.au defines revenue as the amount earned before expenses and other deductions, and says it is also known as turnover. It defines profit as total revenue minus total expenses.

Its guide to cash and accrual accounting explains that the timing of a sale depends on the method. Under cash accounting a sale is not recorded until the customer's payment arrives. Under accrual accounting it is recorded when it takes place, such as when a builder invoices a finished project, even if payment comes later. The guide notes that accrual accounting shows money customers still owe, which cash accounting leaves out.

business.gov.au lists records of all income and sales transactions among the records a business needs to keep. The ATO says a record should generally show, among other details, the date, amount, description and purpose of the transaction.

Worked example

Illustrative example: money paid into a business bank account in one month, and how each amount is recorded
Money received	Recorded as	Amount (AUD)
Cash sales at the counter	Revenue	2,350.00
Interest from the bank	Revenue (other income)	14.20
Bank loan paid into the account	Liability	10,000.00
Owner's capital contribution	Equity	3,000.00
Refund of an expense previously paid	Reduces an expense	85.00

Illustrative example only: these rows show the method and are not sourced data.

Common mistakes

Counting a loan or the owner's own money as revenue because it arrived in the bank account.
Reading a rise in revenue as a rise in profit without checking what happened to costs over the same period.
Recording a customer's deposit for work not yet done as revenue straight away, without checking with your accountant how deposits are treated when the books are kept on an accrual basis.
Recording the same sale twice, once when the invoice is raised and again when the customer pays it.
Leaving cash takings out of the books because they were spent or kept in the till and never banked.

Common questions

Is revenue a debit or a credit?

Revenue accounts normally increase with a credit. When a business invoices a customer under accrual accounting, it debits accounts receivable and credits a sales account; when the customer later pays, it debits the bank account and credits accounts receivable, leaving revenue unchanged. A debit to a revenue account usually records a reduction, such as a refund or credit note issued to a customer.

What is the difference between revenue and sales?

Sales are the income a business earns from its main trading, selling goods or services. Revenue is the wider total: sales plus other income such as interest or rent from sublet space. The two words are often used loosely as if they meant the same thing, but the difference shows on the profit and loss statement, because gross profit is worked out from sales alone, while other income is usually listed separately further down.

How do you calculate revenue in accounting?

Add up the income accounts for the period, using only transactions dated within it: sales of goods, fees for services and any other income. If discounts, refunds and credit notes sit in their own accounts, take them away. Which transactions fall in the period depends on whether the books are kept on a cash or accrual basis. At the start of each financial year, income accounts restart from nil.

Why is revenue important to a business?

Revenue is where every other figure on the profit and loss statement starts. It has to cover the cost of what is sold and the running costs before any profit is left, so tracking it month by month shows whether the business is growing, holding steady or slipping. Comparing revenue with a budget also shows early whether planned spending is still affordable, and a fall in one income stream can be spotted before it shows in profit.

Related terms

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Sources

Key financial terms
business.gov.au, Australian Government. Current at 15 October 2026, released 9 July 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
Choose between cash and accrual accounting
business.gov.au, Australian Government. Current at 15 October 2026, released 13 September 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
Record keeping
business.gov.au, Australian Government. Current at 15 October 2026, released 7 November 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
Overview of record-keeping rules for business
Australian Taxation Office. Current at 18 June 2026 (QC60718), released 18 June 2026. Checked 15 October 2026.
© Australian Taxation Office for the Commonwealth of Australia Licence: ATO website copyright notice (copy, adapt and distribute, without implying ATO endorsement).