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Sales occur when someone pays you for your product or service. You can increase sales and still lose money. If you don’t correctly calculate your cost of production and overhead, you might set your prices too low, losing more money as sales go higher. Total sales refers to the total number of units you sell, regardless of how much money you bring in or whether or not you make a profit. If you use the term “sales” to refer to the amount of money you bring in, your total sales would be your total dollar volume.
Revenues are the monies you generate from sales or other activities. Increased revenue doesn't necessarily mean you are making a profit or you have more money to spend on advertising or salary increases or to pay down debt or purchase new machinery. You can also generate non-sales revenues from interest earned, royalties, commissions and other means.
Revenue Can only recognised if service is provided to Client or Customer. You can understand this by2 below scenario:
Scenario1:
If you've sold computer with30 Days payments terms to your customer you immediately recognised the computer sell into your book as soon as computer delivered to customer.
Scenario2:
if customer provide you advance payment say2 Million for some work say construction of building then you will book2 Million as accrued revenue, Liability, and book revenue on monthly basis for the amount of work in any specific month, For example. if you finish work for100K in first month then you recognise revenue for100K only. Journal entry would be:
Scenario1:
DR Account receivable/debtors
CR Sale
Scenario2:
DR Cash 2Million
Cr Accrued revenue2 Million
After1st Month
Dr Accrued revenue100K
Cr Reveue 100K
When is viable or acquired revenue gain ? !Upon completion of the sales process whether the goods have been delivered or service delivery or not according to the requirement of the contract .For installment sales , the companies achieved revenue in the same year of sale, and here we must differentiate between the monetary value of the item ( cash sales ) and the value of futures sales .It is often the sales price greater than the futures price for cash sales and the sales price includes the value of futures interest on futures sales .In the sense that the item price sold in installments include two types of revenueThe first is the sales revenue ( net cash value of sales )The second is interest income (as opposed to seller waived receipt of the return cash immediately )And are recognizing the value of the item directly in the same period and is selling its proceeds sales revenue fulfilled appears in the income statement as income sales , the amount of the expense of debtors includes those amounts that have not been collected after a comprehensive interest on futures sales .The interest income it does not come to with the passage of time can not be regarded as interest earned in the same period , but rather be considered (interest unearned appear as a deduction for the expense of debtors that contains originally on the value of cash sales plus interest ) and the aim of the account leader unearned and reveled less than debtors account in the budget is to show the account debtors net realizable value
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