Types of Revenues

Revenues can be classified as:

Operating revenue vs. non-operating revenue.

Operating revenues are those that originate from main business operations.

Non-operating revenues are earned from some side activity.

Non-operating revenue is the portion of an organization's income that is derived from activities not
related to its core business operations.

Non-operating revenue can include such items as dividend income, capital gains and losses from
investments, gains or losses incurred by foreign exchange, asset write-downs, and other non-
operating revenues and expenses.

Net sales are operating revenues earned by a company for selling its products or rendering its
services. Also referred to as revenue.

The revenue a company receives in the course of its normal operations. Examples include sales
and commissions, as well as other things that may vary according to the time of business.
Importantly, operating revenue on a balance sheet reflects only ordinary revenue rather than
unexpected, one-time income.

• Service Revenue - revenue earned from rendering services. Other account titles may be used
depending on the industry of the business, such as Professional Fees for professional practice and
Tuition Fees for schools.
• Sales - revenue from selling goods to customers. It is the principal revenue account of
merchandising and manufacturing companies.
• Sales Discounts - a contra-revenue account that represents reduction in the amount paid by
customers for early payment. It is shown in the income statement as a deduction to Sales.
• Sales Returns and Allowances: also a contra-revenue account and therefore shown as a deduction
to Sales. Sales return occurs when there is actual return of a defective item. Sales allowance
happens when the customer is willing to keep the item with a reduction in its selling price.
• Dividend Revenue - is used to record the dividend earned on the stock of other companies, which
is owned by the business.
• Rent Income - earned from leasing out commercial spaces such as office space, stalls, booths,
apartments, condominiums, etc.
• Interest Income - revenue earned from lending money
• Commission Income - earned by brokers and sales agents
• Royalty Income - earned by the owner of a property, patent, or copyrighted work for allowing
others to use such in generating revenue

• Franchise Fee - earned by a franchisor in a franchise agreement

• Other Comprehensive Income:

Examples of items that may be classified in other comprehensive income are:

• Unrealized holding gains or holding losses on investments that are classified as available for sale
• Foreign currency translation gains or losses
• Pension plan gains or losses
• Pension prior service costs or credits

Revenue/Sales/Fees: These accounts are used interchangeably to record the main revenue
amounts. However most companies/businesses give their revenue account a more specific name
like: fees earned, service revenue, etc.

Accrued Revenue: Accrued revenue is a sale that has been recognized by the seller, but which has
not yet been billed to the customer. The debit balance in the accrued billings account appears in
the balance sheet, while the monthly change in the consulting revenue account appears in the
income statement.

Unearned /Deferred revenue is the portion of a company's revenue that has not been earned, but
cash has been collected from customers in the form of a prepayment.

Accrued vs. Unearned Revenue:

Unearned revenue represents the opposite situation of an accrued revenue in which a customer
prepays for a good or service. In order to balance the cash that the company receives in such a
transaction, the company books the value of the goods or services that it's obligated to provide as
unearned revenue, which is a liability.
 Examples of Revenue Streams

Revenue streams categorize the earnings a business generates from certain pricing mechanisms
and channels. To describe it simply, a revenue stream can take the form of one of these revenue
models:

• Transaction-based revenue: Proceeds from sales of goods that are usually one-time customer
payments.
• Service revenue: Revenues are generated by providing service to customers and are calculated
based on time. For example, the number of hours of consulting services provided.
• Project revenue: Revenues earned through one-time projects with existing or new customers.
• Recurring revenue: Earnings from ongoing payments for continuing services or after-sale
services to customers. The recurring revenue model is the model most commonly used by
businesses because it is predictable and it assures the company’s source of revenue as ongoing.
There are many different types of recurring revenue streams:
o Subscription
o Renting, leasing, or lending assets
o Licensing content to third parties
o Brokerage fees
o Advertising fees

Accrued Revenue vs. accounts Receivable

Accrued Revenue

Accrued revenue is the revenue that a company has earned by delivering products or providing
services but has not received in cash from customers. Accrued revenue as earned must also be
realizable based on company expectation of successful cash collections in the future. In effect,
companies may recognize accrued revenue, independent of cash collection on related accounts
receivable.

Accounts Receivable
Accounts receivable are a kind of current asset that companies expect to convert to cash in the near
future. The balance of particular accounts receivable is the same as the amount of related accrued
revenue, but accounts receivable generate cash flows when collected rather than revenue. In a
credit sale, companies debit accounts receivable to increase the balance of accounts receivable in
the balance sheet, as opposed to debiting cash for a cash sale. For companies that use the cash basis
of accounting, a credit sale and its resulting accounts receivable are not considered as having
generated any revenue.

Other comprehensive income- or OCI, consists of items that have an effect on the balance sheet
amounts, but the effect is not reported on the company's income statement. ... Some examples of
the items classified as other comprehensive income include: Unrealized gains/losses on
hedge/derivative financial instruments.