• Thursday July 9,2020


We explain what the income is and the types of income that exist. In addition, its definition in different areas such as accounting and economics.

Income is the increase in economic resources.
  1. What is the income?

The increase in economic resources that an organization, a person or an accounting system presents, and which constitutes an increase in their net worth, is called income. This term is used with similar technical meanings in different fields of economic and administrative work.

For example, the total that a company receives for the sale of its products is called `` income '' (in English), but also the total income received by citizens of a nation It is called the same (in English).

Depending on the specific meaning, income can be a variable considered when measuring economic and financial performance, or when designing accounting and administrative plans .

Types of income

The income can be classified into different categories, such as:

  • Public Revenue Those that receive the State or its different dependencies from taxes and other collection mechanisms.
  • Private income Those that bind private companies or private groups, whether or not they are for profit.
  • Ordinary income. Those that are obtained in a customary manner, that is, habitual, such as regular wages and payments.
  • Extraordinary income. Those who come from unforeseen or unexpected events or events, such as issuing government bonds or winning the lottery.
  • Total income is. The sum of what is perceived by an organization or a company because of its regular business activity, that is, when selling all its products or services.
  • Marginal income. In microeconomics, the increase in the total sale of a sector is called that, when a unit is positioned more than expected.
  • Average income . An indicator obtained from the average of the products sold, that is, the total income among the total units sold.

It can serve you: Financial Statements.

  1. Entry into accounting

In accounting, a distinction is made between income from the sale of goods or the provision of services.

Business accounting considers income as an increase in the net worth of a company, either due to the increase in the value of its assets (increase in profits, for example), or due to the decrease in its liabilities (such as the maturity of a debt ).

In this calculation the contributions of partners and owners are not contemplated, however, since these should eventually return to investors.

It usually distinguishes between income from the sale of goods or the provision of services. However, whether or not the income is monetary, they are framed in the same calculation of consumption and profit.

  1. Income in economy

In economics, income is the total earnings of an entity.

The income in economy is equivalent to the total of the profits that an entity receives budgetary, whether public, private, individual or group. It is one of the indispensable elements in any economic evaluation, whether monetary or not, the result of the consumption-profit circuit.

The presence and nature of income in a society are part of the elements that characterize the social, political and cultural relations that it presents, since they have an impact on the quality of life and economic stability.

In addition, they can be reinjected into the economic circuit, generating dynamism and movement in the economic system, all of which often translates into growth.

  1. Income and expenses

Expenditures are the capital outflow that the organization must make.

Income and expenses are opposite terms. This opposition is based on the fact that income is linked to the entry of capital into an organization or system, the result of its profits and its economic activity; while expenditures point to the opposite process: capital outflow or disbursements of money that the organization must make, but which result in loss or decrease in net worth.

In other words, regular payments and investments are not considered expenses, since they are part of the ordinary productive circuit and must return at the end of the cycle. Instead, extraordinary payments and monetary losses or not, must be recorded as an outflow.

  1. Income per capita

The per capita income calculates the income of the inhabitants in relation to the national income.

Per capita income (head income) is called an indicator consisting of the calculation of the income of each of the inhabitants, their families, businesses, organizations, etc., in relation to n with the national income and therefore with the quality of life and the level of consumption of said society. It is usually calculated according to the following formula:

Per capita income = National income (IN) / Total population (PT)

Per capita income is often used to establish economic comparisons between countries or regions, and thus establish the pace of progress of a country with respect to its neighbors or the like.

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