Revenue is the main indicator of the economic activity of an enterprise

The meaning, purpose and task of any production is to make a profit. Revenue is a means of selling products. These funds are transferred to the account of the organization for the goods provided to consumers, work performed or services rendered. Revenue is not only the main source of revenue for the company. These funds are also used for cost recovery.

Revenue is the main indicator of the economic activity of the enterprise. In each economic sector, the means of implementation will have a more specific definition. So, for example, for an industrial enterprise, revenue is the sum of sold products, for a construction company - the amount of work that has been produced in value, expressed in value, and the turnover for a trade organization.

The revenue of the organization can be not only the result of the main activity. The enterprise can receive funds from non-operating transactions. In particular, revenue can come from renting out premises, carrying out transactions using securities.

Funds from sales represent income only partially. They (the funds) are used by the enterprise to purchase raw materials, pay off the debt, pay taxes and deduct payments to different budgets and funds. All the funds that the organization receives (or expects to receive) in accordance with the performance of concluded contracts, net of tax deductions, is net revenue. Part of the money goes to pay wages. Thus, from the whole amount, the necessary deductions are made first, and then the net income (net revenue) remains.

One of the most important moments in the economic activity of an enterprise is the timeliness of the receipt of funds from sales. This moment is given great importance in connection with the fact that it is precisely when revenue is received that the cycle of the organization's activities is completed. The receipt of funds allows the enterprise to make up for the costs of production and create the conditions under which a new cycle of activities will begin. Along with this for the enterprise, means of sale are the main and regular source of income.

Timeliness of the receipt of funds ensures the financial stability of the organization, excludes delinquencies in payments to banks, the budget, tax authorities, funds, suppliers, as well as its own employees. If the revenue is not received in time, the enterprise is not in a position to fulfill its obligations, which can lead to the imposition of fines, loss of profits, and in some cases, to a halt in production.

There are two ways to determine the means of implementation.

For tax reporting, a cash or accrual method can be used.

In the first case, revenue is determined by the payment terms for shipped products, that is, after the cash (in cash) or non-cash (to the bank account) funds for the goods are credited.

The accrual method determines revenue according to the terms of shipment of goods and presentation of the relevant settlement documents to the buyer.

As a rule, the first method is applied in small enterprises. The remaining organizations should adhere to the accrual method, taking into account the proceeds after the shipment of the goods.

In determining the funds from the implementation of the performance of work, the provision of services or the shipment of goods, tax liabilities are formed at the same time. Their occurrence does not depend on when the company receives money from the buyer. This may form a lack of financial resources of the organization.

The amount of revenue is greatly influenced by the pricing process. To a large extent, the cost of goods is determined by the market, in accordance with the balance of supply and demand. The price of the products produced by the enterprise must be formed in such a way that after the cost recovery the profit remains.