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Revenue is mentioned in the income statement but also affects the balance sheet. If a company has cash only payment terms then revenue generates an equivalent amount of cash on the balance sheet. If the company has terms that allow credit to customers, then revenue generates an equialent amount of accounts recievable on balance sheet. Even when there is some sale of asset in exchange of another asset like a barter transaction then some other asset might increase on balance sheet. The increase in asset generates an offsetting increase in owner’s equity, which means the retained earnings will increase. Therefore we understand that impact of revenue on balance sheet is that an increase in asset account and equivalent increase in equity account.

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