Many people mistake “income” and “revenue” as the same thing. However, there are many small differences between the two financial concepts.
Both “income” and “revenue” are financial and business terms. Their meanings closely resemble each other because they are often used in the same context. Both concepts are applicable in accounting and economic disciplines.
“Revenue,” for instance, is the total amount of money that a business earns by doing its activities. These activities include selling a product or a service, but it can also be earned by an indirect means. Indirect business revenue can be gained if a business has placed money in investments.
On the other hand, “income,” also known as “net profit,” is the money left for a business after it subtracts costs and expenses from its revenue. Costs and expenses include the operational costs (salaries and wages, upkeep of machinery, security, expenses for rawmaterials, to name a few), depreciation, and capital. Costs can be categorized into many types (usually in tandem) that include fixed and variable costs, direct and indirect costs, and lastly, product and period costs. Income can also be categorized as positive or negative. Positive income means there is more revenue or less expenses while negative income accounts for a low revenue or high expenses.
