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1. Revenue may arise from either ordinary activities or extraordinary activities2. Revenue may arise from the sale of goods, the rendering of services or the use by other parties of an entity's assets3. Revenue includes cash received from borrowings4. Revenue includes cash received from share issues
Revenue is the gross inflow of economic benefits during the period arising from ordinary activities of an entity.
IAS-18 is applied for revenue arising from the following transactions:
(a) the sale of goods;
(b) the rendering of services; and
(c) the use by others of entity assets (i.e. yielding interest, royalties and dividends)
IAS18 deals with the following revenues:
1. Revenue from Sale of Good
2. Revenue from rendering of services
3. Revenue from Use by others of Entity Asset
So as per IAS18 , Statement2 is correct
Revenue can certainly arise from sale of goods. But in this respect margin or profit is more important. The sale price should be higher than the cost price + any overhead expenses. Otherwise there could be break even or even a loss.
Yes we do earn a revenue when we provide services and when other entities use our premises. A hotel earns its income from selling services and we earn income when we rent our house property.
I think in good accounting practice income from borrowings cannot be income as we have to repay them along with interest. Also income from issue of shares would be considered as capital receipt. Income from extra ordinary activities like sale of property would come under capital income and not revenue income.
under IAS18 Revenue means
income or gains arising from ordinary course of business
it includes sales, services, royalities, interest , dividends
it excludes trade discount and VAT
Revenue may arise from either ordinary activities or extraordinary activities
2
Revenue may arise from the sale of goods, the rendering of services or the use by other parties of an entity's assets.
