Chapter 8
Accounting for Revenue
In This Chapter
Knowing how and when to recognise revenue
Considering construction and service contracts
Divvying up dividends
Receiving royalties
Including interest income in the financial statements
Revenue is usually the biggest number in the financial statements of a company and revenue is also defined differently around the world. Sales and turnover are often the more familiar terms used for revenue, but they all boil down to the same thing – revenue is the lifeblood of a company. Without revenue, a company won’t generate cash, and the phrase ‘cash is king’ is as relevant in business today as it was 100 years ago.
Be careful not to confuse what constitutes revenue and what gives rise to a gain. Revenue arises from a company’s ordinary activities. Gains are one-time events that don’t relate to the company’s core business. Gains include things like ...
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