Direct vs Indirect Revenue

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on April 13, 2023

Revenue Definition

The amount that a business earns by selling goods or providing services is called revenue.

It includes both cash received for goods sold and services rendered and accounts receivable for goods sold and services rendered on credit.

Revenues that appear in the trial balance are of the following two kinds:

  • Direct revenue
  • Indirect revenue

Direct Revenue

Revenue earned from routine activities of the business, such as the revenue generated from the sale of goods and rendering services to customers, is known as direct revenue.

Direct revenue is credited to the trading account.

Indirect Revenue

Revenues earned through activities other than the routine activities of the business are called indirect revenues.

Indirect Revenue Examples

The following items are included in indirect revenues:

  • Rent Received
  • Discount Received
  • Discount from Creditors
  • Discount on Purchases
  • Interest on Drawings
  • Reserve for Discount on Creditors
  • Interest Received on Renewal of Bills
  • Bad Debts Recovered
  • Provision for Bad Debts (Cr. Balance)
  • Royalty Received
  • Apprentice Premium
  • Sundry Income

Direct vs Indirect Revenue FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.