Revenue Accounting Period Definition

Revenue includes only the gross inflows of economic benefits received.

Revenue accounting period definition. At the end of the accounting period the revenue accounts are totalled and the balance positive or negative transferred to the profit and loss account. The revenue account is a temporary equity account that increases total equity in the company. Revenue is money brought into a company by its business activities. Revenue is the value of all sales of goods and services recognized by a company in a period.

Revenue also referred to as sales or income forms the beginning of a company s income statement and is often considered the top line of a business. This means that the revenue account has a credit balance and is closed at the end of each accounting cycle to a permanent or balance sheet account. A period of time at the end of which a company prepares a financial report for example after three six or twelve months. Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity other than increases relating to contributions from equity participants.

Definition an accounting period also called a reporting period is the amount of time covered by the financial statements. In other words it s the time frame of activities that are summarized in the financials. This makes sense because the revenue account is supposed to record the income earned in the current period. An accounting period is a period of time that covers certain accounting functions which can be either a calendar or fiscal year but also a week month or quarter etc.

Revenue is also known as sales as in the price to sales ratio an alternative to the price to earnings ratio that uses revenue. Revenue can also include the discounts and deductions for any returned merchandise during the same period.