Revenue and sales are closely related but have distinct meanings in business and accounting contexts.
Sales refer to the actual amount of goods or services sold by a company during a specific period. It represents the total value of transactions where customers exchange money for products or services. Sales are typically measured in terms of quantity sold or units of products/services, multiplied by the selling price per unit.
Revenue, on the other hand, is the total income generated by a company from all its business activities, including sales of goods or services, as well as other sources such as interest, royalties, licensing fees, or rental income. Revenue represents the top line of a company’s income statement and is calculated by multiplying the quantity sold (sales) by the selling price per unit. However, revenue also includes any other income generated by the company.
In summary, sales represent the specific amount of goods or services sold, whereas revenue encompasses all income generated by the company, including sales and other sources. Sales are a subset of revenue, as they contribute to the total revenue of a business.