6 March 2018

Income accounts: what should be included?

The same applies to costs and expenses, income accounts are classified within the income statement group. They represent the money received by the business in consideration for the delivery of goods or services. In the balance sheet, they are usually on the credit side.

On this basis, here is what you need to know about these accounts to keep your business accounts in order.

How to differentiate income accounts

Income accounts can be classified according to many different criteria.. Depending on the choices made, a perspective on the state of the accounts and the financial health of the business.

Among the factors to be taken into account in classifying them accounts are (To elaborate, in this article we explain what passive income is).

Origin of the payment obligation.
Operating incomeThis is how money received as payment for the enjoyment of the company's own activities is termed.
Inonoperating incomeIn this case, the amounts recorded on the income account are received for reasons not directly related to the business's activities.
Effectiveness of payment.
Actual incomeare amounts received by bank transfer, bank cheque or cash payment.
Presumptive income: en a common concept and refers to the presumed interest arising from a company's loan of money to its partners or shareholders.
Method of payment.
Money.
Species.
Nature of income.
IOrdinary incomeare those perceived as profit, resulting from the activity of the business.
Revenue Extraordinary: when these annotations appear, generally sporadically, in the income accounts indicates that dividends are being paid.
Source of income.
Income from domestic sourcesthey are the result of the provision of services, the exploitation of tangible or intangible assets, or the disposal of tangible and intangible assets carried out within the borders of our country.
Non-domestic income: this is how those who include credits obtained abroad are considered, credit intended to finance exports or any other form of credit obtained abroad.

How to keep orderly business accounts

To carry a balance sheet In orderly business operations, it is important to record all income in the appropriate entry.

The analysis of income statements, when they are well-ordered, duly documented, and contain complete, high-quality information, allows for an understanding of the company's real situation. as regards:

The amount of money available and the cash flow.
Expected profits.
The profitability of operations.
The best and worst performing periods.

If the other profit and loss accounts are also kept up to date, and with the same diligence, decision-making will minimise risk upon becoming aware of the business's economic circumstances and being able to anticipate the situation in the coming months.

To increase the accuracy of both income accounts and expenditure and cost accounts, it is important to implement technological solutions that automate information gathering and allow business accounting managers to gain a global overview. of what happens in real time, reducing the probability of error to a minimum.