How does revenue affect the balance sheet?

Generally, revenues (sales, fees earned) will increase a corporation’s stockholders’ equity and its assets.

More specifically, revenues will increase the retained earnings section of stockholders’ equity. The assets that usually increase are cash or accounts receivable. However, it is possible that another asset would increase or that a liability would decrease.

Revenues are also reported as the top line on the income statement.

Learn about the Accounting Equation.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.