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Revenues
Revenues are fees or income earned in exchange for goods, services and other activities the business participates in.
Operating Revenues
Operating revenue is generated by a company's primary business activities.
Examples
- Sales revenue
- Service revenue
Non-Operating Revenues
Non-operating revenue is revenue generated by activities outside of a company's primary operations.
Examples
- Interest Revenue
- Rent Revenue
- Gains from disposition of assets
- Gains from settlement of liabilities
Watch Out!
For certain companies, interest and rent may be considered as operating revenues if part of their primary business involves generating income through lending money or renting space. It is not common, but it is possible.
Contra-Revenues
Accounts that decrease the amount of revenue actually collected by the company.
Examples
- Sales discounts
- Sales returns and allowances
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Example: Revenues
Suits 2 Go sells men's formal suits for many different occasions as well as offering tailoring services. Last year, the company's operations were moved to a new building that was purchased on a busy downtown street to attract new clientele.
The company's most recent financial statements reported the following:
- What was the total amount of operating revenue earned by the company?
- What was the total amount of non-operating revenue earned by the company?
Practice: Revenues
Match the revenue type with the business that is most likely to treat it an an operating revenue.
A.
Real estate management company
B.
Lawyer
C.
Retail store
D.
Bank
Interest revenue
Sales revenue
Rent revenue
Service revenue
Practice: Revenues
You were recently hired by XYZ Corp to replace their previous bookkeeper. XYZ specializes in the sale and service of computer electronics. On your first day on the job, you noticed that all of the company's revenues were being classified as operating revenues. The following is an excerpt of the company's income statement:
