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Karnataka Class 12 Commerce Economics Revenue Complete Details

Karnataka Class 12 Commerce Economics Revenue Complete Details

Karnataka Class 12 Commerce Economics Revenue : The Karnataka University identifies the regional needs and overall development of students of this back ward region of north Karnataka. A large number of students suffer from lack of communication skills and opportunities to develop their personality. The University has considered the region specifie and community specific needs and has introduced (a) Computer Applications, (b) Environ mental problems and Human Rights, (c) Indian Constitution and (d) Development of Communication Skills and personality as compulsory papers at the UG level Periodic ICT workshops are conducted for students and staff (teaching and non-teaching) to equip them with the skill to access and utilize electronic information. The central library is equipped with thousands of books on all subjects. Journals and educational CD-ROMs. The University is part of the UGC-INFONET which affords access to more than 5000 electronic journals for advanced study and research. A full-fledged Computer Centre has been set up in the Students Home. All the class rooms are equipped with modern teaching and learning aids including audio-visuals, slides, OHP and LCD projectors.

Economics

Karnataka Class 12 Commerce Economics Revenue Complete Details

Karnataka Class 12 Commerce Economics Revenue :  Economy is the large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated. This is also known as an economic system. The economy encompasses all activity related to production, consumption and trade of goods and services in an area. The economy applies to everyone from individuals to entities such as corporations and governments. The economy of a particular region or country is governed by its culture, laws, history, and geography, among other factors, and it evolves due to necessity. For this reason, no two economies are the same.

Download here Karnataka Commerce Class 12 Economics Revenue Complete Details In PDF Format 

Karnataka Class 12 Commerce Economics Revenue Complete Details

Karnataka Class 12 Commerce Economics Revenue : Karnataka Class 12 Commerce Economics Revenue is a income generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of an organization before any costs or expenses are deducted. Revenue is shown usually as the top item in an income (profit and loss) statement from which all charges, costs, and expenses are subtracted to arrive at net income. Also called sales, or (in the UK) turnover.

Read this article to learn about the meaning and concept of revenue, micro economics!

Meaning of Revenue:

The amount of money that a producer receives in exchange for the sale proceeds is known as revenue. For example, if a firm gets Rs. 16,000 from sale of 100 chairs, then the amount of Rs. 16,000 is known as revenue.

Revenue refers to the amount received by a firm from the sale of a given quantity of a commodity in the market.

Revenue is a very important concept in economic analysis. It is directly influenced by sales level, i.e., as sales increases, revenue also increases.

Concept of Revenue:

The concept of revenue consists of three important terms; Total Revenue, Average Revenue and Marginal Revenue.

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Total Revenue (TR):

Total Revenue refers to total receipts from the sale of a given quantity of a commodity. It is the total income of a firm. Total revenue is obtained by multiplying the quantity of the commodity sold with the price of the commodity.

Total Revenue = Quantity × Price

For example, if a firm sells 10 chairs at a price of Rs. 160 per chair, then the total revenue will be: 10 Chairs × Rs. 160 = Rs 1,600

Average Revenue (AR):

Average revenue refers to revenue per unit of output sold. It is obtained by dividing the total revenue by the number of units sold.

Average Revenue = Total Revenue/Quantity

For example, if total revenue from the sale of 10 chairs @ Rs. 160 per chair is Rs. 1,600, then:

Average Revenue = Total Revenue/Quantity = 1,600/10 = Rs 160

AR and Price are the Same:

We know, AR is equal to per unit sale receipts and price is always per unit. Since sellers receive revenue according to price, price and AR are one and the same thing.

This can be explained as under:

TR = Quantity × Price … (1)

AR = TR/Quantity …… (2)

Putting the value of TR from equation (1) in equation (2), we get

AR = Quantity × Price / Quantity

AR = Price

AR Curve and Demand Curve are the Same:

A buyer’s demand curve graphically represents the quantities demanded by a buyer at various prices. In other words, it shows the various levels of average revenue at which different quantities of the good are sold by the seller. Therefore, in economics, it is customary to refer AR curve as the Demand Curve of a firm.

Marginal Revenue (MR):

Marginal revenue is the additional revenue generated from the sale of an additional unit of output. It is the change in TR from sale of one more unit of a commodity.

MRn = TRn-TRn-1

Where:

MRn = Marginal revenue of nth unit;

TRn = Total revenue from n units;

TR n-1 = Total revenue from (n – 1) units; n = number of units sold For example, if the total revenue realised from sale of 10 chairs is Rs. 1,600 and that from sale of 11 chairs is Rs. 1,780, then MR of the 11th chair will be:

MR11 = TR11 – TR10

MR11 = Rs. 1,780 – Rs. 1,600 = Rs. 180

One More way to Calculate MR:

We know, MR is the change in TR when one more unit is sold. However, when change in units sold is more than one, then MR can also be calculated as:

MR = Change in Total Revenue/ Change in number of units = ∆TR/∆Q

Let us understand this with the help of an example: If the total revenue realised from sale of 10 chairs is Rs. 1,600 and that from sale of 14 chairs is Rs. 2,200, then the marginal revenue will be:

MR = TR of 14 chairs – TR of 10 chairs / 14 chairs -10 chairs = 600/4 = Rs. 150

TR is summation of MR:

Total Revenue can also be calculated as the sum of marginal revenues of all the units sold.

It means, TRn = MR1 + M2 + MR3 + ……….MRn

or, TR = ∑MR

The concepts of TR, AR and MR can be better explained through Table 7.1.

Table 7.1: TR, AR and MR:

Units Sold (Q)Price (Rs.) (P)Total Revenue (Rs.) TR = Q x PAverage Revenue (Rs.) AR = TR+Q = PMarginal Revenue (Rs.) MRn=TRn-TRn-1
11010=1×1010 =10 + 110 =10-0
2918 =2×99 =18 + 28 =18-10
3824 =3×88 =24 + 36 =24-18
4728 = 4×77 =28 + 44 =28-24
5630 = 5×66 =30 + 52 =30-28
6530 = 6 x 55 =30 + 60 =30-30
7428 = 7×44 =28 + 7-2 =28-30

Download here Karnataka Commerce Class 12 Economics Revenue Complete Details In PDF Format 

Karnataka Class 12 Commerce Economics Revenue Complete Details

Karnataka Class 12 Commerce Economics Revenue :  Revenue is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the “top line” or “gross income” figure from which costs are subtracted to determine net income. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. Revenue is also known as “REVs.”

BREAKING DOWN ‘Revenue’

Revenue is the amount of money that is brought into a company by its business activities. Revenue is also known as sales, as in the price-to-sales ratio, an alternative to the price-to-earnings ratio that uses revenue in the denominator.

There are different ways of calculating revenue, depending on the accounting method a business employs. Accrual accounting will include sales made on credit as revenue, as long as the goods or services have been delivered to the customer. It is therefore necessary to check the cash flow statement to assess how efficiently a company collects the money it is owed. Cash accounting, on the other hand, will only count sales as revenue if the payment has been received. When cash is paid to a company, this is known as a “receipt” to distinguish it from revenue. It is possible to have receipts without revenue, if the customer paid in advance for a service that has not been rendered or goods that have not been delivered.

Revenue is known as the “top line” because it is displayed first on a company’s income statement. Expenses are then deducted from revenue in order to obtain net income, or profit – the “bottom line.”

A company’s revenue may be subdivided according to the divisions that generate it. For example, a recreational vehicles department might have a financing division, which could be as a separate source of revenue. Revenue can also be divided into “operating revenue,” or sales from a company’s core business, and “non-operating revenue,” which derives from other, secondary sources. As these non-operating revenue sources are often not predictable or recurring, they can be referred to as one-time events or gains. For example, proceeds from the sale of an asset, a windfall from investments or money awarded through litigation would be considered non-operating revenue.

Investors will often consider a company’s revenue and net income separately to determine the health of a business. It is possible for net income to grow while revenue remains stagnant, as a result of cost-cutting; such a situation does not bode well for a company’s long-term growth. When public companies report quarterly earnings, the two figures that receive the most attention are typically revenue and earnings per share (“earnings” being equivalent to net income). Subsequent price movement in stocks generally correlates to whether a company beat or missed analysts’ revenue and earnings per share expectations.

In the case of government, revenue is the money received from taxation, fees, fines, inter-governmental grants or transfers, securities sales, mineral rights and resource rights, as well as any sales that are made.

For non-profits, revenue is often referred to as “gross receipts.” Its components include donations from individuals, foundations and companies; grants from government entities; investments; fundraising activities; and membership fees.

Download here Karnataka Commerce Class 12 Economics Revenue Complete Details In PDF Format 

Karnataka Class 12 Commerce Economics Revenue Complete Details

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