Income
From Wikicpa
Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business. For example, for individuals income usually means the gross amount on their paychecks, i.e. amount before any tax and other deductions has been made by their employer.
Internationally, the accounting term income is synonymous to term revenue. One of the best accounting definitions of income is the one used by International Accounting Standards Board (quotation from IFRS Framework):
- Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. [F.70]
In U.S. business and accounting, however, income most often means the amount of money that a company earns after paying for all its costs. Outside the U.S., the term is usually profit or earnings. To calculate a company's income, it starts with its amount of revenue, deducts all costs, including such things as employees' salaries and depreciation, and the number that results is its income, which may be a negative number. This money is typically reinvested in the business, paid in corporate tax and used to pay the owners (the shareholders) a dividend.
