What defines revenue in a business?

Revenue in a business is defined as the increase in assets that result from the sale of a product or service. This definition captures the essence of what revenue represents: it is generated when a business engages in transactions that lead to the transfer of goods or services to customers, who in turn provide payment. This influx of money or financial assets signifies the business's ability to generate income from its operational activities.

This understanding of revenue is fundamental to financial reporting and accounting, as it reflects a company's performance and profitability over a specific period. By recognizing revenue, businesses can assess their operational effectiveness and ability to create value through their offerings.

The other options do not accurately represent revenue. For instance, an increase in liabilities deals with obligations and debts rather than income generation. Total expenses are costs of running a business, which would decrease net income rather than reflect revenue. Similarly, expenses reduced by the cost of goods sold do not capture revenue since this calculation is more about margin analysis rather than the generation of revenue itself.