What is an income?

In accounting, income is understood as the increase in economic resources. This increase cannot be due to new contributions from the partners, but must come from their activity, from providing services or from the sale of goods.

Income causes an increase in business assets, since on the one hand it can increase the asset of a company, and on the other reduce the passiveand the obligations that exist.

To record the income that a company has, it is necessary to classify it according to whether it comes from the sale of goods or the provision of a service. To be able to record income from the sale of goods, some requirements are necessary:

  • That the buyer has been informed of the risks and benefits of the operation
  • That the company does not maintain control of the goods sold
  • That the amount can be easily valued
  • That costs can be measured
  • That benefits can be obtained from the operation

The requirements so that goods for the provision of services can be accounted for.

  • That can be easily assessed
  • That there is a probability of obtaining benefits
  • That the degree of completion of the service can be assessed
  • That the costs of performing the service can be measured

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