Answer to Question #193332 in Economics for prakash reddy

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

Answer 1

Operating revenue (Revenue from Operation) is the revenue that a company generates from its primary business activities. For example, a retailer produces its operating revenue through merchandise sales; a physician derives their operating revenue from the medical services that they provide.

If the company has other sources of income from investments, for example, the income is not considered revenue since it wasn't the result of the primary business.

So, the sale of gift hampers should be recorded as Revenue from Operation, and dividend receipt should be counted as Other income.