What are Revenues?

Revenues are the fees generated from the sale of goods and services. Under the cash basis of accounting, revenues are recorded when cash is received from a customer in payment of these items. Under the accrual basis of accounting, revenues are recorded when goods and services are delivered to customers.

Examples of Revenue Accounts

There are several possible accounts in which revenue transactions may be stored, such as Sales - Goods, Sales - Services, and Fees Earned. These accounts are credited when sales transactions are entered into the accounting system, with the offsetting debit to either the Cash account (when cash payments are received) or the Accounts Receivable account (when customers are billed). If the customer paid in advance, then the offsetting debit is to the Unearned Revenue liability account.

Types of Revenues

There are two main types of revenues, which are as follows:

Operating revenues. When revenues are generated from an organization’s primary activities, they are classified as operating revenues, and may be stated as such on the income statement.
Non-operating revenues. Any other revenues are classified as non-operating revenues. For example, any interest earned by a company that is in the business of distributing coffee beans would classify the interest income as non-operating revenues.