What is the difference between sales and revenue?
Sales and revenue are commonly used to refer to profits during business transactions. This has made many people believe that they can be used interchangeably but this is not the case.
The main difference between sales and revenue is that sales refer to the income generated by the business organization after selling products or services whereas revenue refers to the total amount generated by adding sales and other sources of income.
The lesson provides a detailed excerpt on the difference between sales and revenue with a comparison chart for easier understanding.
What Are Sales?
Sales refer to the income generated by the company after selling goods and services. It can be calculated by multiply the total units sold with the selling price. It can either be cash sales or credit sales.
What is Revenue?
Revenue refers to the total amount generated by the company. It is calculated by adding sales with other incomes. It enables the company to allocate resources and invest to maximize more earnings.
Comparison Table (Sales Vs Revenue)
|Meaning||Refers to income generated by the business organization after selling the products and services||Refers to the total amount generated by adding all sales and other incomes.|
|Calculation||Multiplying total number of units sold by the selling price||Addition of all sales and other income|
|Purpose||Shows the ability of the business organization of selling goods and services to make profit||Shows the ability of the business organization to invest and allocate resources for maximizing more profits.|
|Represent||Operating revenue||Total revenue|
|Incorporates||The economic value of products and services obtained from consumers||All sources of income|
|What is it?||Company source of income||Outcomes of sales|
Core Difference Between Sales and Revenue
- Sales represent operating revenue while revenue represents the total revenue
- Revenue incorporates all sources of income whereas sales incorporate economic value if products
- Sales refer to company sources of income while revenue is the result of sales
- The significance of sales shows the ability of the company to sell goods and services whereas revenue shows the ability to invest and allocate resources
- Sales are calculated by multiplying the total units sold by selling price whereas revenue by adding all the amounts with other incomes.
Read More: Difference between Trade-Off and Opportunity Cost
The core difference between sales and revenue is that sales refer to the total amount of income generated by the company through the selling of products and services whereas revenue refers to the total amount of income generated by the company.
More Sources and References
- Accounting Fundamentals. EUCBA
- Business Terminologies. Marketing91