Calculating adsense revenue

I am new to adsense and I was wondering how the adsense calclations are made.
Do google takes into consideration of the clicks alone or it takes the page impressions as well..

The traditional method for adsense income was based upon clicks. However, my reading of the "advertise on this site" documents makes me think that those ads are based upon page impressions.

It can be both -

I recently got a notice that Google now gives publishers two chances to earn money - one from clicks, one from impressions. Both work simultaneously, as I understand it. AdWords buyers can specify that they want to see their ads on your site, and for that assurance they pay a per impressions fee. They might also naturally get their ads on your site just from the process of the contextual ad system G has. This bidding gives the AdWords buyer some assurance that the ad will be seen (unless the publisher has blocked ads for that specific site).

I didn't read it all that well, but I think the publisher also gets paid if the purchased impression also generates a click.