Understanding revenue is crucial in business, distinguishing between operating and non-operating sources, and clarifying its difference from net income. Revenue, the total income from business activities, is vital for assessing financial performance and is also the backbone of government finance through tax and non-tax sources. This knowledge is key for strategic decision-making in both sectors.
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Revenue is the total income earned by a company from its business activities over a certain period of time
Operating Revenue
Operating revenue comes from a company's core business activities, such as sales of goods or services
Non-Operating Revenue
Non-operating revenue comes from secondary activities, such as investments, interest, and gains from asset sales
Revenue is the total amount of money earned before expenses are deducted, while income is what remains after all expenses have been subtracted
Tax revenue is the primary source of income for governments, collected through various taxes such as income tax, corporate tax, and value-added tax
Corporate Tax
Corporate tax is charged on a company's profits and varies across jurisdictions
Personal Income Tax
Personal income tax is levied on individuals' earnings and has progressive rates based on income levels
Value-Added Tax (VAT)
VAT is a consumption tax applied to most goods and services in the UK at a standard rate of 20%
Tax revenue is crucial for funding government operations and public services
Non-tax revenue comes from sources such as fees for services, fines, and profits from state-owned enterprises
Non-tax revenue provides a supplementary stream of income for governments
Customs duties are taxes levied on imported goods
Customs duties contribute to government revenue and can protect domestic industries by making imported goods more expensive
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The total income a company earns from its business operations is known as ______.
revenue
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Operating Revenue Definition
Income from core business activities, e.g., sales of goods, service provision.
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Non-Operating Revenue Sources
Earnings from secondary activities, e.g., investments, interest, dividends, asset sales.
