---
title: "Revenue"
description: "What revenue is in accounting, when it is recognised under the accrual basis and IFRS 15, how it differs from cash received, and a worked journal entry example."
canonical: https://ledgeriano.com/glossary/revenue
language: en
publisher: "Ledgeriano"
updated: 2026-11-06
---

# Revenue

> What revenue is in accounting, when it is recognised under the accrual basis and IFRS 15, how it differs from cash received, and a worked journal entry example.

Revenue is the income a business earns from its ordinary activities, such as selling goods, providing services or licensing software. Under the accrual basis it is recognised when control of the goods or services passes to the customer, at the amount the business expects to be entitled to, regardless of when the cash is received.

IFRS 15 and its US GAAP equivalent, ASC 606, use a five-step model: identify the contract, identify the performance obligations, determine the price, allocate it, and recognise revenue as each obligation is satisfied. For most small businesses this simply means revenue is booked when the goods are delivered or the service is performed.

Revenue is not the same as cash. A sale on credit is revenue now and cash later, while an advance from a customer is cash now and revenue later, held meanwhile as [deferred revenue](https://ledgeriano.com/glossary/deferred-revenue). VAT collected on sales is never revenue: it belongs to the tax authority. Revenue appears at the top of the [income statement](https://ledgeriano.com/glossary/income-statement).

## Example: a credit sale

A wholesaler delivers goods worth 12,000 plus 5% VAT on 30-day terms. It records revenue of 12,000 on delivery, VAT payable of 600 and a receivable of 12,600. When the customer pays, the receivable is cleared against bank; revenue does not change.

| Account | Debit | Credit |
| --- | --- | --- |
| Trade receivables | 12,600 |  |
| Sales revenue |  | 12,000 |
| VAT payable (output VAT) |  | 600 |

### What is the difference between revenue and income?

Revenue is income from ordinary activities such as sales. Income is the wider term that also covers gains, for example a profit on selling equipment.

### Is revenue the same as profit?

No. Revenue is the top line before any costs. Profit is what remains after cost of sales and all other expenses are deducted.

Guide: https://ledgeriano.com/guides/financial-statements