REVENUE (also known as Sales) are inflows of economic benefits or cash.
Imagine REVENUE as your “river” or “stream” of cash flowing inwards, and ASSETS as your “lake” or “reservoir” of cash where it flows into. The larger the cash inflows i.e. REVENUE that occur, the larger the corresponding ASSET that will be formed as it gets collected and stored.
Let it flow! Let it flow! Let if flow!
REVENUE is measured over a period or duration of time (for example over a year, a quarter or a month) whereas ASSETS are measured at a certain date or a point in time (yesterday, today or tomorrow).
Example:
Revenue from sale of goods or a service
When you sell a product or a service to a customer in exchange for cash, that creates REVENUE for you. The REVENUE is the inflow of cash that you receive from your customer.
The Nature of Revenue:
REVENUE is CREDIT in nature.
When REVENUE gets BIGGER or INCREASES, it will head in a CREDIT direction, which is its nature. Conversely, when REVENUE gets SMALLER or DECREASES, it will head in a DEBIT direction.
In Conclusion:
As REVENUE are inflows of economic benefits, which moves much like a river into your “cash reservoir”, then let’s listen to a song that talks about a "river". Here’s “Proud Mary” by Creedence Clearwater Revival.
Enjoy!!!
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