Income: is it all me or should I share?

In our time, the concept of profitability is more important than ever. And if earlier income was a purely entrepreneurial concept, now we are all somehow connected with it.

In fact, income is the amount of money receipts or tangible assets of a particular entity (individuals, legal entities or the state as a whole) for a certain period, which is the result of any activity permitted by law.

In addition, there is still such a term as net income. There are a lot of opinions and judgments about the interpretation of this concept. Quite often, the net revenue is defined as revenue, taking into account the deduction of all expenses from it. But in this case it will be profit.

In fact, this indicator is often confused with income, but in practice these are different concepts, and profit is just the end result of the enterprise's activities. It is calculated as income, from which all expenses and mandatory payments are deducted. In this case, we mean net profit.

What, then, is net income? This is all money or material income, with the exception of certain mandatory payments ( value added tax, excise tax), as well as other deductions from income. Such a calculation sequence can be seen in the Statement of Financial Results. And where, how not, is there an answer to the question about the formation of incomes and profits?

Consider these concepts for an example.

Say, the firm sold the goods for the amount of X, which will make up its income. This is the first category. When the firm deducts VAT from this amount, we will get Y, that is, net income. But when we subtract the cost (which, by the way, will be the gross profit), waste on labor payment, delivery, transportation, maintenance of administrative personnel, depreciation, profit tax and other costs, we will get a net profit. In fact, this is the amount of money that can be disposed of, and from which nothing is to be deducted. But if the embezzlement exceeds revenues - it will be a loss.

Such an algorithm concerns financial accounting. In the tax system, everything looks a little different. In connection with the fact that in her income is any cash flow to the account, and in the financial accounting system - for the first event. That is, if the goods are shipped, then its selling value is displayed as the revenue received, even if the buyer has not paid the order yet. And if a prepayment for the goods has been made on the account of the firm, but the latter has not yet been shipped, it is the date of transfer of funds that will be taken into account as the receipt of income.

If we talk about individuals, namely people who are not entrepreneurs, then income is the sum total of all receipts (wages, additional earnings, gifts, etc.). If we deduct deductions in the form of taxes and social funds from this amount, we will receive a net income. And when we subtract the costs of food, transportation, clothing, etc. from this indicator, then there will be (if lucky) profits, which can be deferred to receive additional income in the form of interest.