Profit, Revenue, and Balance Sheet Essentials

Apuntes

TECHNICAL VOCABULARY ACCOUNTING MANAGEMENT & FINANCIAL ADMINISTRATION REVENUE Definition Revenue is the total amount of money a company receives from selling goods or services before subtracting expenses. Also called: Sales Turnover (in some countries) REVENUE FORMULA Revenue=Price×Quantity Sold Exampl e A company sells: 100 products $10 each Revenue = $1,000 This is the money earned before paying salaries, rent, taxes, etc. REVENUE = $10 X 100 COGS Cost of Goods Solds COGS is the total direct cost of producing or purchasing the goods that a company sells during a specific period. Simple Meaning COGS is how much it costs to make or buy the products that were sold. Example A bakery sells bread. Direct costs: flour = $200 sugar = $50 baker wages = $300 200+50+300=550 COGS Cost of Goods Solds COGS = $550 Example A bakery sells bread. Direct costs: flour = $200 sugar = $50 baker wages = $300 COGS Cost of Goods Solds Raw material costs Other costs Direct labor costs Operating Expenses Operating Expenses are the regular costs a business pays to run its daily operations, but that are not directly related to producing the goods sold. They are necessary expenses to keep the business functio...