Answer to Question #189346 in Accounting for dhananjay

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

Solution:

Revenue from operations refers to the total revenue generated or earned by a company from its operating activities such as net sales of goods and services rendered.

 

Other income refers to revenue from all other operating activities which are not related to the principal activities of the organization such as interest income, dividend income, and gains/losses from assets disposals.

 

Therefore, the inflows from the sale of gift hampers of Rs 505,000 should be treated as revenue from operations, while the dividend receipts of Rs4,200 should be treated as inflows from other income.