Meaning of Income and Expenses (What they are, Concept and Definition)

Income and expenses are terms of studies in accounting and finance in general, where it is taught that expenses are spent to directly or indirectly generate revenue, whether for individuals or legal entities.

The main concept of revenue is the proceeds from the sale of goods or the provision of services.

Expenses, in turn, are all expenses that a company needs to earn income. Some examples of expenses are salaries, water, electricity, telephone bills, taxes and so on.

See also the meaning of Accounting.

Revenue Concept

recipes are all resources arising from the sale of goods or the provision of services, but not all of them come from sales or services, such as rent, income from a financial investment, interest, and so on.

public revenue

Revenues are not necessarily limited to companies, there is also government revenue, called public revenue.

Public revenue is the total amount of money collected by the National Treasury, incorporated into the State's assets, which serves to defray public expenses and public investment needs.

Expense Concept

expense is all general expenses related to administration and sales, such as: interest, fines, office supplies, etc.

The difference between expense and cost is that expense cannot be directly related to the final product.

For accounting, an expense represents a decrease in assets and an increase in liabilities; and just as revenues cause an increase in equity, expenses decrease its value.

Expenses can be divided into prepaid and non-operating expenses. Prepaid expenses are those paid in advance and that will be considered as expenses during the following year, as insurance maturing. Non-operating expenses are those arising from transactions not included in the main or ancillary activities that are the object of the company.

The comparison between income and expenses occurs when calculating the result for the year, which is the balance of the comparison between them, after a cycle of operations in a company, if the result is positive the company made a profit, if the result is negative the company had a loss.