As with many words, the term ‘Income’ carries a couple of meanings.
Income in accounting, generally refers to the Net Profit. Money left over after all expenses have been accounted for.
The term ‘Income’ can also be used to describe money coming in, to the business or entity and money being paid to a person.
Business Income is money or (cash equivalent) received, for goods or services provided. It could also be in the form of investments or grants for example.
Income is used to cover the expenses of the business and any money left over is considered as profit.
The amount of income along with expenses, are what makes up the Statement of Profit or Loss.
Personal Income is usually received in the form of a salary or wages. Some other examples might include income through investments, pensions and property.
Income is also sometimes referred to as revenue or earnings.
A Statement of Income will provide information around how the business is performing and whether it is sustainable.
An Income Statement can be easily obtained if using online accounting software.
Having an understanding of income is vital to managing cash flow effectively.