But… what are revenue, expenses, gains, and losses?
Revenue
Often called net sales, revenue is the total value generated from operating activities. When a company sells a product or a service to a customer and received cash or creates an account receivable, the company generates revenue.
Expenses
The total cost of operations that the company faces to generate are called revenue. This can include COGS (Cost of Good Sold), SG&A (Selling, General, and Administrative, and others (such as interest expense).
Gain
An increase in the net value of an asset or property is referred to as a gain. It arises when the selling price of an asset is higher than the original purchase price. Therefore, it is the value generated from non-operating activities.
Loss
The decrease in the net value of an asset or property is a loss. In essence, it is an expense incurred from non-operating activities.