Definition: Gross Revenue
Definition of Gross Revenue
What is Gross Revenue?
Gross Revenue is the total amount of a business's income and earnings before subtracting any costs. Costs are subtracted from Gross Revenue to calculate gross profit and net profit. The term "gross" means large amount, the term "net" means smaller amount, and the term "revenue" means incoming gains, as in gains in cash from sales or interest earned from bank accounts.
For example, the Gross Revenue from selling a cookie is the amount you sell the cookie for before subtracting the costs you acquired to make the cookie, in other words the price the customer paid for the cookie. Let's say it costs 50 cents to make a cookie and you sell it for $4. The Gross Revenue from the sale is $4 and the Gross Profit from the sale is $3.50.
Gross Profit = Cookie Revenue - Cookie Costs
Gross Profit = $4 - $0.50
Gross Profit = $3.50
Gross Revenue can be calculated at various stages. For example, a business can calculate its gross revenue on shoe sales separate from coat sales. Since this is the case, gross revenue needs to be carefully defined so that it is not misinterpreted, as in total gross revenue from all income sources verses total gross revenue from shoe sales.
For example, the Gross Revenue from selling a cookie is the amount you sell the cookie for before subtracting the costs you acquired to make the cookie, in other words the price the customer paid for the cookie. Let's say it costs 50 cents to make a cookie and you sell it for $4. The Gross Revenue from the sale is $4 and the Gross Profit from the sale is $3.50.
Gross Profit = Cookie Revenue - Cookie Costs
Gross Profit = $4 - $0.50
Gross Profit = $3.50
Gross Revenue can be calculated at various stages. For example, a business can calculate its gross revenue on shoe sales separate from coat sales. Since this is the case, gross revenue needs to be carefully defined so that it is not misinterpreted, as in total gross revenue from all income sources verses total gross revenue from shoe sales.
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