Answer to Question #174704 in Accounting for DINESH

Question

Love Doddle is a gifting enterprise of Ms. Dorati. The enterprise generates inflows by arranging gift hampers for the customer’s loved ones. The inflows arises from the sale of gift hampers Rs 505000 and from bank interest, dividend receipt Rs4200. Ms. Dorati is confused on how to record these inflows. She would like to understand from you about the concepts Revenue from operation and other income, so that she can record the information so as to prepare the profit and loss statement of the enterprise. Define, share examples, and elaborate on your understanding towards the terms Revenue from Operation and Other Income (10 Marks)

Answer 1

Revenue from operations refers to the revenue earned by a company from its normal operating activities such as net sales, or services rendered. It is the total amount of income generated by a company for the sale of its goods or services before any expenses are deducted.

 

Other income refers to income that does not come from a company’s core business. These are incomes generated by activities that do not relate to the normal core operations of the business. Examples include income from interest, rent, gains from the sale of fixed assets, currency

 

Revenue from operations is not recorded on the cash flow statement. It is used to calculate the net income in the income statement. Other incomes are also recorded in the income statement. They are added to the operating income to determine the net income.

The net income figure is what is recorded on the cash flow statement under operating activities.