Revenue receipt is the amount received by the business as a result of its core business activity. It leads to increase in the overall revenue of the business. These receipts refers to the sale proceeds of merchandise or fees received for services rendered, discount received, commission received, interest received, discount received on shares.
Receipt of money in the revenue nature increases the profits or decreases the losses of a business and must be set off against the revenue expenses in order to find out the profit or loss for the period.
FEATURES OF REVENUE RECEIPTS
NATURE: These are recurring in nature which means it arises out of the normal course of business activities.
AMOUNT: The small amount of funds are involved.
RECORDING: The revenue receipt being the recurring in nature is shown in the Income Statement i.e. Profit and Loss account.
USE FOR DISTRIBUTION AS PROFITS: These are the receipts which are recurring in the nature. That is why the amount received against these receipts is available for distribution as profits.
CREATION OF RESERVE FUND: These receipts are used to create reserve funds.
IMPACT ON VALUE OF ASSET OR LIABILITY: These receipts do not arise out the increase or decrease in asset or liability.
MATCHING: These receipts are matched against the revenue expenditure to find out the profit or loss of the firm. If the revenue expenditure is more than the revenue receipt, the result will be loss and if the revenue expenditure is less than the revenue receipt, the result will be profit.
The income received from daily and periodic activities of business includes all the operations that involve cash into the business like:
- The sale of any kind of inventory
- Income from services rendered
- Different types of discount received from the suppliers
- Sale of scrap
- Interest received, etc