Concept of Income - Management Duniya

Concept of Income

Concept of Income:

Though there are many concepts of income, but mainly two basic concepts as follows.

1. The accounting concept of Income


2. Economic concept of Income

The accounting concept of Income:

According to Carsberg Bryan in general income refers to increases in wealth. The accounting concept of income is consistent with the everyday use of the term. Income equals increases in net assets.

I_a – R-E

Where  Ia= Accounting Income

R = Realised revenues of the period

E = Expenses (Considering Historical cost)

Thus we can say the accounting income is the difference between the realised revenues arising from the transaction of the period & the corresponding historical cost.

This definition illustrates that traditionally the transactions approach has been adopted by accountants for the determination of the income. This approach largely meets the revenue principle (historical) cost principle.

Tags: accountants, accounting, Accounting Income, Accounting Management, accounts, Capital, Capital Expenditure, Concept, Concept of Income, Cost, expenses, historical cost, income, income and expenditure, Management, of, revenue
By: Management Duniya