I've seen it many times - that glazed look in my client's eyes as I start using terms like revenue, cash flow, equity, retained earnings. Bookkeeping and accounting seem, from the outside, to be filled with dry arcane language - but understanding these terms brings a clearer understanding of your business.
SO. Revenue. Revenue is one of my top votes for most misused term. Revenue is, simply, ALL of the income earned by your compay in a given period. ALL of it. Whether an invoiced sale, a cash payment from a client, an interest credit from the bank, earnings from an investment account. It is often used, incorrectly, as interchangeable with Sales. Sales may be only one part of a company's Revenue.
Profit. Profit is Revenue minus the costs of doing business. This is often broken down into Gross and Net. Gross Profit is Revenue minus only "Cost of Goods Sold" (ie, if you sell widgets your gross profit is Revenue minus the direct costs of producing widgets). Your Net Profit is your Gross Profit minus all of your other costs.
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