Final answer:
The question focuses on revenue recognition in business, stating that companies report revenue when they transfer goods or services to customers for the expected payment. Total revenue is calculated by multiplying the product's price by the number sold, and it is critical to distinguish revenue from profit, which is revenue minus total cost.
Step-by-step explanation:
The question posed relates to the recognition of revenue by companies, which is a fundamental concept in accounting and business. Revenue recognition is the process where companies report income when goods or services are delivered and the company has a right to be paid for them. This amount is what the company expects to receive from customers for the provided goods or services. To calculate the total revenue, you multiply the selling price of the product by the quantity sold, using the formula Total Revenue = Price x Quantity.
Moreover, revenue plays a crucial role in understanding the financial performance of a company. It is also important to note that revenue is different from profit, which is the income remaining after deducting all costs associated with generating that revenue. The profit equation is Profit = Total Revenue - Total Cost. Understanding these concepts is essential for anyone studying business or accounting, and they are crucial for making informed decisions in the business world.