Revenues- Revenues refer to the amount received from day to day activities of the business, like sales proceeds of goods and rendering services to the customers. Rent received, the commission received, royalties, and interest received are considered as revenue, as they are regular in nature and concerned with day to day activities. It is shown on the credit side of the profit and loss account or trading account.

Expenses- Expenses refer to those costs that are incurred to earn revenue for the business. It is incurred for maintaining the profitability of the business. It indicates the amount spent to meet the short-term needs of the business. It is shown on the debit side of the profit and loss account or trading account. For example, wages, rent paid, salaries paid, outstanding wages, etc.