Revenue facts & stats

Question 1

Why is revenue often called a company's 'top line'?

Accepted Answer

It is listed first, before costs are subtracted. Revenue is the first figure on a company's earnings report, so people call it the top line.

Question 2

A shop sells 100 items at $5 each. What is its revenue from those sales?

Accepted Answer

$500. Revenue equals price times quantity: 100 x $5 = $500.

Question 3

Gross profit is revenue minus what?

Accepted Answer

Cost of goods sold. Gross profit subtracts only the direct costs of making or buying the products sold.

Question 4

What is 'recurring revenue'?

Accepted Answer

Income that repeats predictably, like subscriptions. Recurring revenue comes in regularly from ongoing customers, such as monthly memberships.

Question 5

A company has revenue of $200 and cost of goods sold of $150. What is its gross margin?

Accepted Answer

25%. Gross profit is $50, and $50 divided by $200 revenue is a 25% gross margin.

Question 6

Which Italian mathematician published an early description of double-entry bookkeeping in 1494?

Accepted Answer

Luca Pacioli. Pacioli's 1494 book Summa de arithmetica described the double-entry method used by Venetian merchants.

Question 7

When a customer pays in advance for a service not yet delivered, how is that money recorded?

Accepted Answer

As a liability called unearned revenue. The company owes the service, so the payment is a liability until it is earned.

The basics