The cost of revenue is the cost to produce a product. Operating expenses are expenses that have to be paid in order to stay in business like rent, utilities, etc.
Cost of goods plus gross profit margin equals to total sales revenue of firm.
Non-revenue generating support areas
It is the difference between revenue from the business and the cost of making a product or providing a service. This is the number before you deduct all expenses.
assets liablities revenue cost of goods expenses
operating expenses/operating income
It is the difference between revenue from the business and the cost of making a product or providing a service. This is the number before you deduct all expenses.
In business, an operating margin is the revenue of a business minus the operating expenses. It is the ratio of operating income divided by net sales.
What would profit be is revenue is $3000, cost of goods are $1500 and expenses are $500
Net income plus operating expenses equals gross profit, or total revenue. To calculate net income, accountants subtract total expenses from total revenues.
Matching Cost against Revenue principles stipulate that a revenue generated must have an associated cost to it. As & when a revenue is recognized, so is the cost.
Well if you look at it by the basics you will see both use the same Net income = revenue - expenses. However the income statement for the service company subtracts the operating expenses from the revenues to arrive at net income. The merchandising company subtracts the cost of merchandising from the revenue to arrive at gross profit. It then subtracts all other operating expenses to arrive at net income.
Well if you look at it by the basics you will see both use the same Net income = revenue - expenses. However the income statement for the service company subtracts the operating expenses from the revenues to arrive at net income. The merchandising company subtracts the cost of merchandising from the revenue to arrive at gross profit. It then subtracts all other operating expenses to arrive at net income.