How do revenue and gains differ?

Revenue and gains differ primarily in their sources and the nature of the transactions from which they arise. Revenue is generated from a company's core business operations, such as the sale of goods or services that form the basis of its business model. For instance, a car dealership earns revenue from selling cars, which is central to its operations.

On the other hand, gains come from activities that are not part of the regular operations of a business. These might include income from the sale of an asset that is not regularly sold in the course of business, such as selling a piece of furniture or equipment, or from investments that yield unexpected profits. Such gains are often considered peripheral or incidental, distinguishing them from the primary revenue-generating activities of the business.

This distinction is crucial for financial reporting and analysis, as it helps stakeholders understand the sustainability of a company’s earnings. By recognizing that revenue is tied to ongoing operations while gains are typically one-off or less predictable events, investors and analysts can better assess a company's performance and financial health.