Income in Accounting Terms | Accounting Dictionary (2024)

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Income in Accounting Terms | Accounting Dictionary? ›

Income (Net Income)

There are different terms for income, depending on the quantity being measured. Gross income is the total value of your salary or payments, without accounting for any cash outflows. Net income refers to the income left over after subtracting taxes or fees.

Common business expenses include rent, salaries, advertising, administrative expenses and insurance. On the other hand, revenues are the income generated by the company.

As with assets and liability items, items of income and expense are recorded in nominal ledger accounts according to set rules. Expenses are always recorded as debit entries in expense accounts and income items are always recorded as credit entries in income accounts.

The income statement is also known as a profit and loss statement, statement of operation, statement of financial result or income, or earnings statement.

What is the difference between income and earnings? Earnings refers to money earned from employment, whereas income is total money received, including from earnings, benefits and pensions, and so on.

Revenue describes income generated through business operations, while profit describes net income after deducting expenses from earnings. Revenue can take various forms, such as sales, income from fees, and income generated by property.

On the balance sheet, net income appears in the retained earnings line item. Net income affects how much equity a business reports on the balance sheet.

An asset is any resource with economic value that is expected to provide a future benefit to its holder. An asset may be differentiated from income by this distinction: income is money that is being received, whereas an asset is something—typically money or property—that a person is already in possession of.

Is income category nominal or ordinal? ›

For example, income is a variable that can be recorded on an ordinal or a ratio scale: At an ordinal level, you could create 5 income groupings and code the incomes that fall within them from 1–5.

Assets and income differ in a company's ownership of them. Income is the money that a company continually brings in each time they make a sale. An asset is the money that a business already has in its possession.