Definitions of Income

Exist many definitions of Income. A student in college will count his income as the total money that he has available to spend during the year. A businessman will define income in a more complicated way. His gross income will consist of revenue from the sale of goods or services. Net income will measure what remains after meeting the expenses of producing the goods or services. The economist's definition of income is closer to that of the businessman than to that of the student. The income definition used by an economist is based on the output of an economic system during a period of time. That is, the goods and services that are produced in a country (the output) during a period of time, such as one year, are matched by the income received from the production of those goods and services in that year. Definitions of Income

Per-capita Income

Per capita income is the average amount of money each person in a nation makes during the course of a year. It is calculated by dividing national income, which is the sum of all the individual and corporate income arising from a nation's production of goods and services, by the total population of the nation. Per capita real income is the same figure, but adjusted to eliminate changes in prices or purchasing power over time. Many economic terms are commonly divided by population and expressed as per capita, or per person, amounts. Examples might include per capita gross national product (GNP) and per capita savings. Per-capita Income.

Income and Revenue

Income is an important concept in economics as well as accounting. Accountants prepare an income statement to measure a company's income for a given accounting period. For accounting purposes, income is distinguished from revenues. A company's revenue is all of the money it takes in as a result of its operations. Another way of defining a company's revenue is as a monetary measure of outputs, or goods sold and services rendered, with expense being a monetary measure of inputs or resources used in the production of goods or services. More about Income and Revenue

National Income

The concepts of national income and the conventions that have been established for estimating it serve as the basis for a formal set of accounts and supporting statements. These are the estimates of national income and are typically presented, as in the United States, in the form of an income and product account. National income is measured at factor cost as the aggregate earnings of labor and property that arise in the current production of the nation's good and services. Gross national product (GNP) is the market value of the output of goods and services, before deducting depreciation charges and other allowances for the consumption of durable capital goods. Read more...