Which is a broader term between the two- Income or Revenue?

Revenue and income are two accounting terms that are often used interchangeably. However, it is important to understand that these two terms are different. Let us know the difference between the two through the discussion below:

What is Revenue?

Revenue is the total amount of a business’s sales. It is the total amount earned by a business before deducting any expenses. Revenue is recognized in accounting as soon as a sale happens, even if the payment hasn’t been received yet.

For example, XYZ Ltd sold 100 pens at a selling price of 10 per pen. The total revenue of the business is hence 1,000.

What is Income?

Income is the amount earned by a business after deducting any direct or indirect expenses. It is the amount that is left after subtracting all expenses, taxes and other costs from Revenue.

Which is a broader term between the two?

Revenue is a broader term as it includes the total earnings a business generates before deducting any expenses. It includes all sales of goods or services during a specific period.

On the other hand, income is calculated after deducting certain expenses like taxes, interest, etc. This makes it more specific and refined than revenue.

Revenue provides a measure of a company’s ability to generate sales and income reflects the efficiency in managing costs and generating profits.