Terms Revenues and Receipts generally confuse most of us

The terms Revenues and Receipts both indicate the amount earned by an organisation during the course of its business activities. But do they both mean the same? How are they different from each other? Even though both Revenues and Receipts are used interchangeably they have significant difference.

The term Revenue has a broader coverage than Receipts.Revenue is the income generated from sale of goods or services, or by use of capital or any other assets associated with the main operations of an organisation before any costs or expenses are deducted. Therefore company’s revenues are amounts it has earned as the result of business activities such as selling of goods or rendering services. For example if the company has sold a product then revenue is earned at the time of sales whether the cash is received of not.

On the other hand, Receipts refer to the amount of money received by the business for selling goods or services. It is also commonly known as Cash receipts. For example, cash received from the debtor to whom the Company lent some money.

Under the Accrual Basis of Accounting, Revenues are recognised on the date on which they are earned. Receipt is the amount of cash a business receives during an accounting period. Receipts could be cash sales and also money received from a customer. Receipts may also include cash received by the business from any source like loan. A company’s receipt usually means cash which is received.

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FAME is a leading Accountancy training provider. FAME brings together under one roof a wide range of accounting courses blended with real world experience and practical application. FAME aims to bridge the gap between theoretical knowledge and practical challenges that accountants face in their day to day working. We provide practical workplace skills for finance staff meeting the needs of employers, bankers, government and learners, both now and in the future. Our students are integral to the success of an organisation and at the heart of ensuring the smooth running of an accounting department.