Income

From Wikipedia, the free, on-line encyclopedia:

Income refers to consumption opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings received... in a given period of time." For firms, income generally refers to net-profit: what remains of revenue after expenses have been subtracted. In the field of public economics, it may refer to the accumulation of both monetary and non-monetary consumption ability, the former being used as a proxy for total income.

Go to Wikipedia and read the entire article.

Investopedia lists the following kinds of income:

Net Income
Portfolio Income
Taxable Income
Passive Income
Ordinary Income
Personal Income
Nonpassive Income And Losses
Unearned Income
Investment Income
Net Investment Income
Sundry Income
Provisional Income
Operating Income
Net Operating Income - NOI
Marginal Tax Rate
Passive Activity
Operating Income Before Depreciation And Amortization - OIBDA
Non-Operating Income
Modified Adjusted Gross Income - MAGI

Revenue is revenue, but income is a bagel. Along time ago, my previous brother-in-law went to a store to buy a bagel. He was in Michigan, and and bagels had just begun to be known. The person who waited on my b-i-l asked him for the kind of bagel he wanted, cinnamon and raisin, onion, sesame seed, plain, everything, blueberry, cranberry, etc. My b-i-l was flummoxed. It's like that with "Income". You hear it bruited about, basically meaning money made. But go to Investopedia.com and read about what income really means and about the various forms of income.

Sales leads to money in the door. Revenue, and all the other kinds of income. Bottom line: without customers, no sales. Without sales, no revenue, or income of any kind.

So our job begins with sales, the creator of wealth. But that's a complex thing, and we're going to be on it for a while.

What do you think about this? I'd like to know. Post a comment.

Entrepreneurship 2.0 is my entrepreneurship course. The ideas in it supply the life's blood of my professional activities: teaching, writing, and real estate. For entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for entrepreneurial writing to www.kearneymusicschoolmurders.blogspot/com.

Revenue

From Wikipedia, the free, on-line encyclopedia:

In business, revenue or revenues is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. Some companies also receive revenue from interest, dividends or royalties paid to them by other companies.[1] Revenue may refer to business income in general, or it may refer to the amount, in a monetary unit, received during a period of time, as in "Last year, Company X had revenue of $32 million."

InvestorWords.com says:

For a company, this is the total amount of money received by the company for goods sold or services provided during a certain time period. It also includes all net sales, exchange of assets; interest and any other increase in owner's equity and is calculated before any expenses are subtracted. Net income can be calculated by subtracting expenses from revenue. In terms of reporting revenue in a company's financial statements, different companies consider revenue to be received, or "recognized", different ways. For example, revenue could be recognized when a deal is signed, when the money is received, when the services are provided, or at other times. There are rules specifying when revenue should be recognized in different situations for companies using different accounting methods, such as cash basis and accrual basis.

InvestorWords.com gives separate definitions for firms and for the government. We won't concern ourselves with the government.
The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income.

Investopedia defines revenue as:

The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the 'top line' or 'gross income' figure from which costs are subtracted to determine net income. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold.

Revenue is what we want to get from our businesses. You don't have any income without revenue and no revenue without sales.

What do you think about this? Post a comment.

Entrepreneurship informs all of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com./blog and for entrepreneurial writing, go to www.kearneymusicschoolmurders.blogspot.com

Sales

Wikipedia, the free, on-line encyclopedia, says, "A sale is the pinnacle activity involved in selling products or services in return for money or other compensation. It is an act of completion of a commercial activity." InvestorWords.com defines sales growth as, "The increase in sales over a specific period of time, often but not necessarily a year."

You sell shoes. A customer tries on a pair. He likes it. You wrap them up for him, he pays you, and he's on his way. You made a sale.

Sales is an activity. Cash flows from it. Growth in sales creates growth in cash. Two other words, "revenue and income, are related concepts, but I don't think they're the same.

Jae Shim and Joel Siegel, in Financial Management (New York: Barron's Business Library, 2000), say:

"The sales budget is the starting point in preparing the master budget since estimated sales volume influences nearly all other items in the master budget. The sales budget ordinarily indicates that quantity in units of each produc the company expects to sell. That number is multiplied by the expected unit selling price to construct the sales budget." (p. 67)

What do you think about this? Post a comment.

Entrepreneurship informs all of my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com./blog and for entrepreneurial writing, go to www.kearneymusicschoolmurders.blogspot.com