How do revenues differ from gains?

Revenues are distinct from gains primarily based on their source and context within a company's operations. Revenues are generated through a company's primary business activities and operations, such as selling goods or providing services. This means that revenues are closely tied to the core functions of the business, reflecting the main activities that drive its financial performance.

On the other hand, gains arise from transactions that are not part of the company's ordinary operations. These could include the sale of an asset, such as property or equipment, for more than its carrying amount. While gains do contribute to the total income reported by a company, they do not result from its ongoing business activities.

This differentiation is essential in accounting as it impacts the assessment of a company's performance and financial health. It helps stakeholders, including investors and creditors, understand how well a company is managing its primary business functions compared to other incidental financial activities.