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The amounts a business earns
Examples
◦ Fees earned for performing services
◦ Sales of merchandise
◦ Rent income, and interest income
May take the form of cash, credit card receipts, or accounts receivable (charge accounts) – Trade Debtors
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Fees Earned for performing services
Sales Income from selling merchandise
Rent Income for the use of property
Interest Income for lending money
Credit Sales where cash will be received at a later time
◦ Example: Home Depot sells lumber to a customer and lets the customer pay later
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The costs that relate to earning revenue (the costs of doing business)
Examples
◦ Wages
◦ Rent
◦ Interest
◦ Advertising
May be paid in cash, immediately or at a future time (accounts payable)
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Wages Expense for labor performed
Rent Expense for the use of property
Interest Expense for the use of money
Advertising Expense
Expenses may be paid in cash when incurred
(immediately) or at a later time
Expense incurred but not paid until later
◦ Example: Received a bill for a newspaper ad you took out last week
◦ Cash will be paid at a later time – involves Accounts
Payable
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Revenues and expenses are under the umbrella of owner’s equity
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Revenue  Add to Capital account
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