Corporate accounting plays an important role in controlling the company’s success. It is therefore important for every entrepreneur to know, understand and be able to differentiate between the basic accounting terms. Today we are putting together interesting facts about “income”, “yield” and “performance”.
yield
Income refers to all inflows of value into the company’s income, although there are differentiations. In the profit and loss statement (P&L), a distinction is made between the income from ordinary business activities and the extraordinary income. In cost accounting there is the operating income and the neutral income. While the former arises from the fulfillment of the business purpose, the latter results from extraordinary and non-company business transactions such as tax refunds. As a counterpart, the income is offset by the expenses.
Services
Benefits are basically a component of earnings, but only related to operational activities. There are also distinctions here. There are market services, for example from production. They lead to sales revenue and an increase in value. In-house contributions are also possible. These contribute to an increase in overall performance. These include, for example, services provided by the administration and sales offices. However, there are also additional services. These do not necessarily result in a return as they are often provided free of charge. However, they contribute to customer satisfaction and can therefore have an indirect impact on profits. The complementary term to services is costs.
revenue
The term “intake” sounds simple, but there are always confusions. Income is equated with deposits or earnings. But they are not the same thing and the term is far more complex.
The Income Tax Act defines income as “all goods that consist of money or monetary value and flow to the taxpayer as part of one of the types of income in Section 2 Paragraph 1 Sentence 1 Numbers 4 to 7. Monetary income also includes earmarked cash benefits, subsequent cost reimbursements, monetary surrogates and other benefits that are denominated in a monetary amount.” In accounting, income includes, in addition to deposits, additions to receivables and disposals of debts. They are material assets and services that are assigned a monetary value and that the company brings to the market.
Here too, different types are distinguished. There are, among other things, so-called capital-releasing income. The company receives liquid funds, for example sales revenue, that were previously tied up. With income that requires capital, the company receives capital from within or outside. An example of this is undistributed winnings. In addition, the concept of operating income is widespread. This includes all income related to a business activity. The counterpart to income are expenses.
In one next post Let’s outline the terms output, effort and costs.
