Revenue in accounting is a source of income for a company that generates profits after deducting expenses incurred during a specified period.
Revenue in a trading company certainly has a difference with income in service companies and manufacturing companies because the activities in trading companies, service companies, and manufacturing companies differ from one another.
In a trading company, the company’s revenue is derived from the sale of the goods made, where the merchandise purchased is sold above the purchase price of the merchandise. Companies will usually reduce the cost of expenses to lower revenue in generating company profits.
Trading company income can be divided into two parts, namely operating income and non-operating income. The following are examples of the working and non-operating income of trading companies. Look at operating revenue website for more information about operating revenue.
Operating income (operating income) or operating profit (operating profit) is gross profit minus operating costs. Credit balance / positive numbers indicate that the company makes money in its primary operations. Debit balance / negative figures show that the company lost money in its primary process.
As the main activity of a trading company is sales, the revenue of the trading company will be obtained from the sales of the company.
Trading company income comes from curiosity when the company has deposited it in the bank.
Sale of assets
The company’s income can also be obtained from the sale of assets. The purchase of assets is usually made because these assets are less supportive of the company’s activities. For example, machines whose use is already less effective, so they must be sold and replaced with new tools.
Sometimes the company leases goods or company assets because the company has excess assets. For example, the company has two buildings where one building is not used, so it is leased to another party.
The company will increase its income when the company has large profits and dividends. The company will improve the company’s performance to increase company revenue and increase gains and dividends.
Operating income varies for each company. Operating income can be obtained from two sources:
Gross sales, i.e., all proceeds from the sale of goods or services before deducting deductions from the buyer’s rights.
Net sales are sales results that have been reduced by the cost of the discount that is the right of the buyer.
While non-operational income is revenue that is earned by the company in a certain period, but not from the main activities or operations of the company (outside the central business). Non-operational income is obtained from incidental side activities. Types of non-operational income can be divided into two types, namely:
Revenues derived from the use of assets or economic resources of the company by other parties. For example, interest income, rent, and royalties.
Revenues earned from the sale of assets outside of merchandise or products. For example, the purchase of securities and the sale of intangible assets.
In managing company revenue, the separation or distribution of revenue sources following the income classification needs to be done. This has the aim to be able to obtain accuracy in making decisions for external parties, especially the users of financial statements.