What is net and gross profit. The difference between income, profit and revenue. For the month the company

The purpose of the functioning of any enterprise, regardless of its size or field of activity, is to make a profit. This indicator can be called one of the most important for analyzing the effectiveness of the organization. It allows you to determine how rationally its means of production and other resources are used - labor, money, material. In a general sense, profit can be viewed as the excess of revenue over costs and resources used for production. However, in the process of financial analysis, its various types are calculated. So, along with net gross. The formula for its calculation, as well as the value, differ from other types of income. She also plays one of critical roles in assessing the effectiveness of the enterprise.

The concept of gross profit

The term comes from the English gross profit and means the total profit of the organization for a certain period. It is defined as the difference between the income received from sales and the cost of production. Some confuse it with gross income. The first is formed as the difference between the proceeds from the sale of goods and the costs associated with their production. In other words, it is the sum of net income and wages of employees. The gross formula of which will be discussed below is a smaller value. It is formed after the payment of taxes (except income tax) and the deduction of labor costs. That is, not only material, but all the total costs associated with production are taken into account.

Formula: gross profit

This value is formed as a result of the sale of all types of products and services, and also includes income from non-sales operations. It shows the efficiency of production as a whole. Let's see how gross profit is calculated. The formula looks like this:

income from sales (net) - the cost of goods / services sold.

Here it is necessary to make clarifications. Net income is calculated as follows:

total sales revenue - the amount of discounts - the value of the returned goods.

In general, we can say that this reflects the income from the transaction without taking into account indirect costs.

Gross and net profit

Gross profit only includes direct costs . They are determined depending on the industry in which the company operates. So, for the manufacturer, the electricity that ensures the operation of the equipment will be and the lighting of the room will be overhead. When net profit is determined, indirect costs are also taken into account. For its calculation, gross profit can be used. The formula looks like:

gross profit - administrative, commercial expenses - other expenses - taxes.

The income received after the payment of all these payments is net and can be used for various needs of the enterprise - social, related to the development of production, etc.

Conclusion

The most important indicator of production efficiency at the enterprise is gross profit. The formula for its calculation is given in the article and reflects the total revenue received from the sale of goods or the provision of services. It is determined taking into account the direct costs of the organization and does not include indirect ones. Thus, this type of profit shows the efficiency of the use of resources directly involved in the main activities of the enterprise.

Hello! In this article, we will talk about related, but not identical concepts: revenue, income and profit.

Today you will learn:

1. What is included in the revenue of the enterprise;
2. What is the income and profit of the company formed from;
3. What are the main differences between these concepts.

What is revenue

Revenue - earnings from the direct activities of the company (from the sale of products or services). The concept of revenue is found exclusively in business and entrepreneurship.

Revenue characterizes the overall performance of the enterprise. It is revenue, not income, that is reflected in accounting.

There are several ways to account for revenue in an enterprise.

1. The cash method defines revenue as real money received by the seller for the provision of services or the sale of goods. That is, when providing installments, the entrepreneur will receive proceeds only after the actual payment.
2. Another way of accounting is accrual. Revenue from it is recognized at the time the contract is signed or the buyer receives the goods, even if the actual payment occurs later. However, advance payments are not included in such revenue.

Types of revenue

Revenue in an organization is:

1. Gross- the total payment received for the work (or product).
2. Pure- applied in . From gross revenue, indirect taxes (), duties, and so on are deducted.

The company's total revenue is made up of:

• Proceeds from core activities;
• Investment proceeds (sales of securities);
• Financial earnings.

What is income

The definition of the word "income" is not at all identical to the term "revenue", as some entrepreneurs mistakenly believe.

Income - the sum of all the money earned by the enterprise through its activities. This increase economic benefit enterprises by increasing the capital of the company by the inflow of assets.

A detailed interpretation of the ways of generating income and their classification are contained in the Accounting Regulation "Income of organizations".

If cash proceeds are funds received by the company's budget in the course of its core activities, then income also includes other sources of funds (sale of shares, receiving interest on a deposit, and so on).

In practice, enterprises often carry out diverse activities and, accordingly, have various channels for generating income.

Income - the overall benefit of the company, the result of its work. This is the amount that increases the capital of the organization.

Sometimes the income is equal in size to the net revenue of the organization, but most often companies have several types of income, and there can be only one revenue.

Income is found not only in entrepreneurship, but also in Everyday life a private person who is not engaged in business. For example: scholarship, pension, salary.

Receiving funds outside the scope entrepreneurial activity will be called income.

The main differences between revenue and income are given in the table:

What is profit

Profit is the difference between total income and total expenses (including taxes). That is, this is the same amount that in everyday life could be safely put in a piggy bank.

In an unfavorable situation, and even with a large income, the profit can be zero, or even go negative.

The main profit of the company is formed from the profit and loss received from all areas of work.

Science economics identifies several main sources of profit:

• Innovative work of the company;
• Entrepreneur's skills to orient in the economic situation;
• Application and capital in production;
• The company's monopoly in the market.

Types of profit

Profit is divided into categories:

1. Accounting. Used in bookkeeping. On its basis, accounting reports are formed, taxes are calculated. Explicit, reasonable costs are subtracted from total revenue to determine accounting profit.
2. Economic (surplus profit). A more objective indicator of profit, since when calculating it, all economic costs incurred in the work process are taken into account.
3. Arithmetic. Gross income minus miscellaneous costs.
4. Normal. Necessary income in the work of the company. Its value depends on the lost profit.
5. Household. Equal to the sum of normal and economic profits. Based on it, decisions are made on the use of the profit received by the enterprise. Similar to accounting, but calculated differently.

Gross and net profit

There is also a division of profit into gross and net. In the first case, only the costs associated with the workflow are taken into account, in the second, all possible costs are taken into account.

For example, the formula by which gross profit in trade is calculated is the selling price of a product minus its cost.

Gross profit is most often determined separately for each type of activity, if the enterprise operates in several directions.

Gross profit is used when analyzing the areas of work (the share of profit from which activity is greater), when determining the company's creditworthiness by the bank.

Gross profit, from which all costs have been deducted (credit interest, and so on), forms net profit. From it are accrued to shareholders and owners of the enterprise. And it is the net profit that is reflected in and is the main indicator of the business.

EBIT and EBITDA

Sometimes, instead of the understandable word "profit", entrepreneurs meet such mysterious reductions as EBIT or EBITDA. They are used to evaluate the performance of a business when the compared objects operate in different countries or are subject to different taxes. Otherwise, these indicators are also called cleared profit.

EBIT represents profit in the form in which it was before taxes and various interest. It was decided to single out such an indicator in a separate category, since it is located somewhere between gross and net profit.

EBITDA is nothing more than profit before taxes, interest and depreciation. It is used exclusively to evaluate the business, its characteristics. It is not used in domestic accounting. for commercial equipment.

Thus, income is the funds received by the entrepreneur, which he can later spend at his own discretion. Profit - the balance of funds minus all expenses.

Both income and profit can be predicted if you take into account revenue for past periods of work, fixed and variable costs.

The differences between profit and revenue are as follows:

The line between concepts may be unclear for an ordinary employee, it does not matter to him how revenue differs from profit, but for an accountant there is still a difference.

A clear understanding of economic categories and income makes it possible to correctly plan and implement their steps, decisions and actions in real economic activity.

The most common misconception is that revenue refers to all cash receipts to sellers in markets and retail outlets, to cash desks and to settlement accounts. After all, other receipts can come to the current account, for example:

Discussion: 9 comments

We with school age we pass in the lessons of jurisprudence, what is income and revenue. But since I did not listen well to teachers at school, I did not remember these definitions well. Now I understand perfectly the difference between income and revenue.

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Once I studied to be an accountant and even managed to work for them a little, but for two years now I have been on maternity leave, I plan to leave soon and refresh my knowledge. I had forgotten the difference between income and revenue.

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Such simple concepts, but there are quite a lot of nuances in each of them. I think these concepts need to be dealt with at the training stage, the most important thing is to understand the essence, then everything will be much easier.

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Understanding the difference between profit, income and revenue is one of the basics taught to future accountants or economists. I have an economic education, and, as far as I remember, teachers in any course could ask a question about the difference between these concepts.

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How subtly it is necessary to understand this matter in order to understand what's what, I never understood the difference, now at least I will know that income is the total amount, and revenue is what is left after secondary expenses.

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1. From a legal point of view, there is a difference between the concepts. Yes, income is a broader concept, revenue is a profit taking into account expenses. In everyday life, there is absolutely no difference, one can say, although the income will be more correct.

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   As practice has shown, many people confuse these two words, that is, they mean the same thing when they say these two different words. It's wrong because they have different meanings. Everything was clearly explained.

   Answer

Gross income- is the proceeds from the sale of goods and services minus their purchase price.

Gross income is formed from trade allowances, receipts for services rendered and work performed (delivery of goods to the house, cutting fabrics, assembly and installation of furniture, etc.), other income from non-core activities (sale of surplus equipment, leasing of premises and facilities retail network, income from equity participation in the activities of other enterprises from securities owned by the enterprise, the balance of income and expenses from non-sales operations, etc.).

Gross income is calculated using the following formula:

VD \u003d H + Su + Pd,

where VD is gross income;

H - the amount of the trade allowance;

Su - the cost of services rendered;

Pd - other income.

Gross income is calculated by two main indicators: the absolute amount (in rubles) and the level (%).

The level of gross income is calculated as the ratio of the amount of gross income to the absolute amount of retail turnover, multiplied by 100%.

Profit

Profit from trading activities is the difference between gross income and distribution costs. Profit is the main indicator of the economic activity of a trading enterprise.

Profit is measured by two main indicators - the amount and level. If the amount of profit is less than the absolute amount of distribution costs, then the financial result of the economic activity of the enterprise will be a loss.

Accounting (gross) profit is the difference between gross income and distribution costs. It is known that not all costs of a commercial enterprise are included in distribution costs. Part of the costs incurred by the enterprise at the expense of profits does not apply to distribution costs. The sum of the costs of the enterprise, taken into account as part of the distribution costs and attributed to profit, forms the economic costs (all the actual costs of the commercial enterprise).

Economic profit is the difference between gross income and economic costs. According to this indicator, one can judge the amount of entrepreneurial income, indicating the payback of expenses, a trade enterprise (entrepreneur) and its ability to self-development.

Profit (loss) from the sale of goods and services is the difference between the gross income from the sale of goods and services (excluding VAT) and distribution costs.

Profit from the sale of fixed assets and other property is calculated as the difference between the sale price and the initial or residual value of these funds and property, increased by the inflation index.

The composition of income (expenses) from non-sales operations includes: income received from equity participation in the activities of other enterprises, dividends on shares, interest on bonds and other securities owned by the enterprise, income from the lease of property, etc. As part of non-operating expenses accounting for tax payments attributable to financial results activities of the enterprise (property tax, transport tax, etc.).

Gross (balance sheet) profit is the end result of the economic and financial activities of the enterprise and is calculated as the sum of profit (loss) from the sale of goods, fixed assets, other property and income from non-sales operations, reduced by the amount of expenses on these operations. Gross (balance sheet) profit is subject to distribution between the enterprise and the state budget.

Net profit is that part of the gross (balance sheet) profit that remains at the disposal of the enterprise after paying income tax.

Taxable income is the portion of gross profit that is subject to tax. When calculating taxable income, gross income excludes amounts taxed at established rates at the source of their payment. These are income from rent, rental of video and audio cassettes, dividends on shares, interest on bonds and other securities owned by a trading company, income from equity participation in the activities of other enterprises, profit from intermediary operations and transactions.

From the foregoing, it follows that profit in trade performs the following main functions: an estimated indicator of the enterprise's activity, acts as a source of material incentives for the work of employees, remuneration for the owners of sections, shares in the authorized capital of the enterprise, and also serves as a source of self-financing of the enterprise and replenishment of the state budget.

For many people, it remains not completely clear what is the profit of the enterprise and income. And if you delve into this topic, then a lot of clarifying terms pop up: gross profit, EBITDA, net profit.

It turns out that when publishing their figures, economists, accountants and statisticians have in mind strictly certain values each term. Such definitions are given in state legislative documents, and their knowledge is mandatory for all reporting employees. But since the sphere of profitability and profitability is of interest to many non-professionals, it would be useful to understand the essence of the concepts under discussion.

What is revenue?

The most easily perceived concept of the modern economy is revenue. Indeed, revenue is the funds received by an organization or private entrepreneur in payment for a product or service. It seems that everything is simple.

However, revenue has its own characteristics at the time of its recognition as such. In everyday life, revenue is understood as real money at the time the seller receives it - revenue is determined by payment. There is a name for this case: the cash method of accounting for revenue. That is, the company can give its goods to the buyer with a deferred payment, and until the money is credited to the current account, there will be no revenue. back side cash method - the need to consider all advances received as revenue.

Another, more common method of accounting for revenue is usually used in large companies. This is an accrual method of accounting for revenue. That is, revenue is recognized as such already when the goods are transferred to the buyer or at the time of signing the act of services rendered, regardless of the actual date of receipt of money. In this case, advances for delivery are not considered revenue.

Revenue can be gross and net. Gross revenue is the total amount of money received for a product or service. Or the full cost of the barter agreement, if we are talking about barter transactions. This indicator is of little interest, since there are mandatory taxes and excises, as well as duties, which are directly included in the price of a product (service). Hence, they must be extracted from the buyer's payment and returned to the state.

So there is another indicator - net revenue. It characterizes the activity of the enterprise, regardless of the composition and size of taxes and excises included in the sale price. Net revenue is always indicated in one of the main reporting accounting documents - the profit and loss statement.

What is income?

Income is the amount by which the capital of the enterprise grows. How can he even grow? One way is by making contributions by the owners of the enterprise, and the other is by its activities. After all, any enterprise is created with the sole purpose of generating income.

The classification of income and expenses is such an important matter that statesmen have devoted many documents to it. The most significant of them are the Tax Code and PBU. The Regulations on Accounting “Income of Organizations” provide full explanations of the methods of formation and types of income of an enterprise.

Without delving into the intricacies of these monumental works, it can be noted that operating income is net sales proceeds. Revenues can be equal to revenue, but this is a rare case. Typically, an enterprise carries out a variety of activities, including different types income.

In addition to income from direct statutory activities, the company may receive other income. For example, the percentage of content own money on deposit or penalties collected from partners. These incomes are classified as other, but they also participate in the formation of the profit of the enterprise.

What is gross profit?

By summing up the income received from various kinds activities and reducing them by the costs associated with them, receive a gross profit. For example, the main activity for the sale of goods or services generates income, and the cost of these goods or services is an expense. The difference between them will give the gross profit for the main activity. The same approach applies to the determination of gross profit from other activities.

Interestingly, in trade, gross profit from the main activity is the difference between the selling price of goods and their cost. And for the industry, this indicator is more difficult to calculate, the cost includes many cost elements that are taken into account according to special rules.

Gross margin is a favorite indicator for comparing the performance of different businesses. In addition, you can determine the gross profit from various activities within the same enterprise and show the efficiency of the production of different goods. Gross profit is very popular with bank employees when calculating the creditworthiness of an enterprise. However, for the owners of the enterprise, another indicator is more important - net profit.

What is Net Income?

The result of all operations in the activities of the enterprise for a certain period is expressed as an indicator of net profit. It is obtained by reducing gross profit by the sum of all costs paid out of it. Such costs are classified according to the rules specified in the laws. IN general case, this is income tax, fines that the company must pay, loan interest and other operating expenses.

Gross profit minus these expenses creates the base from which dividends are accrued to the owners (shareholders) of the enterprise.

It is the net profit that shows the final effect of the enterprise, which is displayed in the main accounting document of the accounting department - the balance sheet.

Other types of income - EBIT and EBITDA

The importance of state regulation in the formation of net profit is difficult to overestimate. In fact, the state sets the rules of the game, regulating the costs by which an enterprise has the right to reduce its profits until the tax is charged on it. These costs, as well as the amount of income tax, may differ by state or even by area within each country.

If the analysis of the activities of enterprises operating in different countries or under different systems taxation, no conclusions can be drawn on the basis of net profit. Therefore, other types of profit are used for comparison: gross, or specially cleared. Cleared earnings include EBIT (earnings before taxes and interest) and EBITDA (earnings before depreciation, taxes and interest).

The first acquaintance with the main economic categories of the enterprise's work took place. Now you know what profit and income are and how revenue differs from them.