Which is greater, net income or profit? What is the difference between income and profit? Let's consider several types of profit

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Few ordinary people will be able to answer the question of how income differs from profit. Both concepts mean the arrival of funds and the possibility of investing them in the future. How these indicators relate to revenue is also a mystery for the reader who is not savvy in economic matters. However, this oversight is easy to eliminate; just understand the terminology.

What is meant by the term "revenue"

The first is the difference between revenue and accounting (that is, explicit, calculated) costs.

Taking into account economic costs, including implicit costs associated with an alternative in conditions of limited resources, we will now talk about economic profit: revenue minus economic costs.

• Let's look at an example. Since the head of a passenger transportation company at one time chose the path of an entrepreneur, rather than the path of an employee with savings in a bank, he faced alternative economic costs, for example, the following:
• savings in a bank account that were invested in business development - 60 tr.
• lost interest on money remaining in the bank - 6 tr.

lost wages from hired work per year - 180 tr.

It turns out that the annual profit of 240 tr, which we calculated earlier, should be reduced by the amount of economic costs:

240 t.r. - (180 t.r.+60t.r.+6t.r.) = -6 t.r.

This business for an entrepreneur will not pay for itself in a year. If the company's accountant congratulates the manager on his annual profit, then the entrepreneur himself will assess the business's performance as satisfactory.

Summary

• Let’s summarize and answer the question of how income differs from profit, what is the difference between them and revenue, highlighting the main points briefly:
• Revenue and income are always positive economic indicators. Profit can be positive (the company is profitable), negative (the company is unprofitable) and equal to zero (the company is at the break-even point).
• Profit is a calculated indicator. It can take into account implicit economic costs. Income can always be calculated and entered into the balance sheet.
• Another difference between income and profit is the legislative connection: commercial enterprises work to achieve profit, non-profit enterprises should not receive profit at all, and municipal enterprises can be profitable, but subsidies only imply breaking even. All businesses can receive income.

Thus, revealing small terminological nuances of the profitable part of enterprises’ activities will allow readers to become more savvy in economic issues.

How does income differ from? Modern entrepreneurship is actively developing, as evidenced by the many vacancies that remain open today. The modern labor market needs highly qualified specialists in the economic field.

So, it is worth noting two basic concepts that are often confused - profit and. Non-professionals consider these words to be synonymous, but those who really understand entrepreneurship and basic economic phenomena and terms understand that this is far from the case. So, let's first understand each of the concepts separately, and then compare them in order to have a clear distinction.

What is income?

Any type of entrepreneurial activity has the main goal of generating not only income, but also profit. What is this income? What does it consist of? Income represents everything received by a business entity, that is, tangible and intangible values, for a certain period of time. They are calculated without taking into account production costs and other mandatory components.

Income is called revenue for a certain period of time. Taxes and fees will subsequently need to be subtracted from the received amount of finance. As a result, we will receive net profit - this is exactly what, after making all payments, will remain in the hands of an individual or legal entity.

Income is a value that is used only in financial. This figure determines practically nothing for the future business development strategy.

What is profit?

Somewhat more complicated. Profit includes income excluding production and manufacturing costs. This is a specific amount that an entrepreneur or organization or enterprise has earned over a certain period of time. Profit is actually what financial and economic activity is carried out for.

Profit plays an important role in running a business. In order to understand how successful a business is, it is necessary to track the dynamics of changes in profits over a certain period of time.

This will help to identify some adverse events and time them or take appropriate measures for it. Income is a component without which it is impossible to determine profit.

Main differences between the concepts of income and profit

There is a huge difference between profit and income. Let's consider the distinctive features of these terms.

1. Income always has more than profit itself.
2. To determine the profitability of a business activity, the main concept is profit.
3. Knowing the amount of income, one cannot say anything about how justified the business is.

In order to more clearly understand the difference between the concepts of income and profit, let's look at an example.

An individual decides to start a business. A citizen opened a clothing store. To do this, he rented an office, hired 3 employees, and purchased goods. During the first month of work, an income of 100 thousand rubles was received. After the first month of work, he decided to determine the profit. In order to find out, you need to make a number of payments:

• rent for premises
• payment for goods
• depreciation
• insurance payments
• costs of purchasing a new batch of goods for further activities
• utility bills and transportation costs
• if a loan was initially taken out, then you will need to deduct the interest on it
• taxes, fees and duties

Possible Outcomes

As a result, one of three possible scenarios may result:

• profit with a minus sign is not only the absence of profit as such, but the entrepreneur will still have to
• zero profit - the entrepreneur owes nothing to anyone and he, in turn, will have nothing left from the income
• profit with a plus sign - this phenomenon is rare in the first month, so if the profit still remains, then in the future, most likely, the business will bring even more profit

In view of all of the above, we can conclude that the profit indicator is much more significant for entrepreneurship, as for any financial and economic activity. The income received does not mean that the business has made a profit. After deducting all the required components, it may turn out that there is no profit at all.

Let's summarize. Profit and income are not synonyms, but completely different economic concepts. Income is all the financial resources that the entrepreneur received from contractors. Profit is income minus production costs.

For business, the concept of profit is much more important, since it allows you to determine how profitable and justified the business is.

Every entrepreneur has a goal, which is to make a profit as a result of their activities. In order to obtain it, you need to understand that business is an activity that requires investment, and there are certain requirements that every taxpayer and citizen must comply with.

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The word income in English letters (transliterated) - dokhod

The word income consists of 5 letters: d d o o x

Meanings of the word income. What is income?

INCOME INCOME Authoritative sources give different definitions to the concept of `D.` for accounting purposes1. `The concepts of `D.` and `profit` are defined as the amounts remaining as the difference between revenue or receipts from the main economy.

Encyclopedia of Banking and Finance

Income is money or material assets received by the state, individual or legal entity as a result of any activity for a certain period of time. This definition gives a general idea of ​​income.

en.wikipedia.org

INCOME is an extremely common, widely used, and at the same time extremely polysemantic concept, used in a variety of meanings. In a broad sense, the word means any influx of cash or receipt of material assets...

Raizberg B.A.

The meaning of the word "income"

Modern economic dictionary. — 1999

Income (from a general economic point of view). Income is understood as either a known amount of receipts in the hands of a person, or a newly created amount of new real values.

Encyclopedic Dictionary F.A. Brockhaus and I.A. Efron. — 1890-1907

INCOME, Vectīgalia, in a general sense means any income of both the state and private individuals, in a narrow sense - indirect taxes, i.e. all taxes, except for capitation and land taxes; but because word vectigal...

Classical antiquities. - 2007

Budget revenues

BUDGET REVENUE (English: budget revenue) – 1) in terms of economic content – ​​monetary relations that arise between the state (represented by the authorized bodies) with legal entities and individuals in the process of forming the country’s budget fund...

Budget revenues are gratuitous and irrevocable receipts of funds into the budget. Revenues form the revenue side of the budget, coming at the disposal of government authorities.

en.wikipedia.org

Budget revenues are funds received free of charge and irrevocably in accordance with the legislation of the Russian Federation at the disposal of state authorities of the Russian Federation...

Rate of return

Dictionary of financial terms

Rate of Return (Rate of Return) The annual return on an investment expressed as a percentage of the cost of the original investment. This norm is of great importance in assessing the comparative merits of various investments.

Dictionary of financial terms

RATE OF RETURN The annual return on an investment expressed as a percentage of the cost of the original investment. This norm is of great importance in assessing the comparative merits of various investments.

Dictionary of financial terms

Income tax

INDIVIDUALS INCOME TAX - introduced on January 1. 2001 (Chapter 23 of the Tax Code of the Russian Federation). Payers: individuals persons who are tax residents of the Russian Federation, as well as non-tax residents of the Russian Federation, but receiving income from sources...

Financial and credit encyclopedic dictionary / Under the general. ed. A.G. Gryaznova. — 2004

INDIVIDUALS INCOME TAX - federal tax under the Tax Code (Chapter 23) and the Law on the Fundamentals of the Tax System. It was levied on January 1, 2001; before that, personal income tax was levied.

Encyclopedia of Taxation. — 2003

Personal income tax is the main tax paid by individuals. Among taxpayers, the legislator distinguishes tax residents of the Russian Federation and tax non-residents.

Large legal dictionary. - M., 2009

Income effect

INCOME EFFECT Part of the reaction in the demand for a good in response to a change in its price, which is caused by an increase in the real income of consumers as a result of a decrease in price.

The income effect is the effect that a change in the price of a product has on the consumer's real income and on the quantity of the product that the consumer will buy, with or without the substitution effect.

The income effect is that part of the consumer's response to an increase or decrease in the price level that reflects the resulting changes in his real income.

slovar-lopatnikov.ru

Gross income

Gross income The difference between the monetary proceeds from the sale of a product and the material costs of its production. Gross income is equal to the sum of wages and net income. 1.

Dictionary of financial terms

GROSS INCOME, calculated in monetary terms, is the total annual income of an enterprise, firm, received as a result of the production and sale of products, goods, services.

Raizberg B.A. Modern economic dictionary. — 1999

GROSS INCOME - the total annual income of an enterprise, firm, calculated in monetary terms, received as a result of the production and sale of products, goods, services.

Raizberg B., Lozovsky L., Starodubtseva E. Modern economic dictionary

Marginal Revenue

MARGINAL REVENUE An increase in total revenue occurs as a result of the quantity sold increasing by a small amount and is measured per unit increase in sales.

Raizberg B.A. Modern economic dictionary. — 1999

Marginal revenue (MR), also marginal revenue, marginal revenue is additional income received from the sale of an additional unit of goods.

en.wikipedia.org

Marginal Revenue Marginal revenue is the additional income received from the sale of an additional unit of output. Marginal revenue is equal to the change in total revenue divided by the change in quantity sold.

Dictionary of financial terms

National income

National income is the value newly created in the sphere of material production or the corresponding part of the total social product in kind, calculated for the year.

TSB. - 1969-1978

National income NATIONAL (PEOPLE'S) INCOME - 1. Newly created (over the year) value in the sectors of material production (interpretation adopted in Marxist literature).

Lopatnikov. - 2003

National income is one of the general indicators of a country’s economic development, the value newly created in material production. National income consists of: wages of workers and employees...

en.wikipedia.org

Net income (NET INCOME)

Net income In general: the amount remaining after all expenses have been paid or deducted; synonymous with the terms net earnings, net profit, net loss...

Financial and investment dictionary. — 2002

Net income (net income, disposable income) is the amount of income remaining at the disposal of an enterprise after payment of tax payments included in the price of products from its gross income.

slovar-lopatnikov.ru

NET INCOME (net income) is the income of a person or company minus all expenses incurred in the process of receiving it, as well as the payment of taxes.

Foreign economic explanatory dictionary

Russian language

Morphemic-spelling dictionary. - 2002

Income, -a.

Orthographic dictionary. - 2004

Examples of using the word income

Net commission income increased by 16 percent compared to 2011 /by 500 million rubles/.

However, the owner of the company was never found and the shares were turned into state income.

The company's marginal income is also insured with a maximum amount of UAH 2.14 billion.

Net commission income in the reporting period increased by 23.7% and amounted to RUB 44.3 billion.

The largest part was earned by the head of the family, who declared an income of 47.628 million rubles.

They then convert foreign money into yuan, which brings them income as part of the carry trade strategy.

They paid less than the face value of the securities, and now they will receive a large income.

Such investments will provide stable income to the country and private investors.

The bank's net interest income and net commission income increased.

What is Embedded Income Tax | Built-In Gains Tax

Tax on embedded income – English Built-In Gains Tax, arises when a company transitions to S Corporation status, accruing on that portion of the increase in the company's value that was not taken into account at the time of transition. Obviously, the Built-In Gains Tax cannot be applied if the company was originally formed as an S Corporation. If a company elects to convert to S Corporation status, it must evaluate its fair market value on the effective date of the new status compared to its tax basis. The amount of unrecognized income is determined separately for each asset. The sum of all unrecognized gains or losses for each asset is the company's unrecognized built-in income. In the US, this amount is declared on Form 1120S ( English Form 1120S).

The most common asset that creates embedded income is goodwill. But, if a company uses the cash method of accounting, then the accounts receivable at the effective date of S Corporation status is also unrecognized built-in income. Since the receivable will be paid after the effective date of the new status, the income received will be treated as recognized built-in income. The S Corporation pays the Built-In Gains Tax at the highest corporate tax rate, which is based on the amount of built-in gains recognized. The amount of tax paid on embedded income is a tax deduction for shareholders.

The built-in income tax may not apply if more than 10 years have passed since the transition to S Corporation status. Accordingly, it is entirely possible to avoid the Built-In Gains Tax if the unrecognized built-in gain is not recognized within 10 years of vesting.

What are revenue, profit and income: how do they differ and what are they formed from?

In tax planning, if built-in income is recognized during the first ten years, then the corporation must show a net loss for that year. The rule is that the Built-In Gains Tax is assessed on the lesser of the recognized built-in gain or the corporation's taxable income if the S Corporation was previously a C Corporation. However, showing a net loss over 10 years can be very difficult. However, if a company recognizes built-in income without having taxable income for a ten-year period, it can avoid the Built-In Gains Tax.

DEFINITION OF THE ESSENCE OF THE CONCEPT OF “INCOME”

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The economic category “income” has been studied for many centuries in close connection with such terms as “economic activity” and “profit” in the works of A. Smith, K. Marx, J. Mill, J. Hicks, V. Pareto, L. Walras , F. Knight and others. The scientific achievements of scientists (the theory of the relative shares of production factors in income, the theory of diminishing returns, the theory of marginal income) were included in the “golden fund” of the postulates of economic theory.

At the present stage of research into the economic category “income,” the emphasis is on deepening the theoretical and methodological aspects of the formation, distribution and use of income at the level of individual business entities. The interpretation of the category “enterprise income” in modern scientific literature is based on two fundamental approaches that determine its content in a broad and narrow sense. In turn, a broad understanding of the content of this concept includes an economic and accounting approach to its definition.

The basis of the economic approach to the definition of this concept is the term “revenue”, that is, the volume of sales of products (works, services) produced by the enterprise. Sometimes this term is identified with the concept of “enterprise income”. An example of a simplified approach is the following definition of this category: “As an economic category, income (revenue) is a flow of cash and other receipts for a certain period received from the sale of products, goods, works, services.” Identifying an enterprise’s income only with revenue from sales of products practically excludes from it such inherent elements as rent received (when providing fixed assets for rent), royalties (payments received by the enterprise for the use of, for example, an innovative software product, trademark, etc.). etc.), dividends and interest on the portfolio of financial investments formed by the enterprise in securities of third-party organizations, etc. Obviously, the concept of “enterprise income” should be considered broader than “revenue from the sale of products (works, services).”

The most common definition among modern economists is the definition of “enterprise income” as the amount of revenue from the sale of products and property, as well as from non-sales operations. As an example of this approach, we give the interpretation of this concept by V.P. Gruzinov: “The income of an enterprise consists of proceeds from the sale of products (works, services), fixed assets (excess) and other property of the enterprise, as well as income from non-sales operations.” A similar definition, in its content, does not contradict the concept of “enterprise income,” although it does not characterize all its aspects, can be found in the works of other scientists.

The accounting approach to the concept of “enterprise income” is mainly based on the term “economic benefit”. This content of this category is defined in International Financial Reporting Standard 18 “Income”: “Income is the gross receipt of economic benefits during a specified period arising in the ordinary course of business of an economic entity, when equity capital increases as a result of this receipt and not as a result of contributions capital participants." However, the definition of income as “an increase in economic benefits in the form of the receipt of assets or a decrease in liabilities” has been criticized by scientists as not entirely correct. Obviously, one should agree with the observation that not every increase in assets or decrease in liabilities characterizes the moment of receipt of income. The receipt of income is evidenced by the payment of an invoice presented by the enterprise to the buyer of its products (goods, works, services). With regard to the obligations of the enterprise, when they are directly repaid, no capital growth actually occurs. What leads to capital growth is not the repayment of obligations, but the creditor’s renunciation of his rights, that is, when assets are received by the enterprise free of charge.

In contrast to the broad interpretation of the concept of “enterprise income”, both in accordance with the economic and accounting approaches, the narrow interpretation of this concept significantly limits the content in terms of quantitative parameters. Economists who adhere to this approach reduce the concept of “enterprise income” to only that part of gross revenue and the results of non-operating operations, which includes only labor costs and profit. According to the definition of M.S. Abryutina: “Income in the economic sense is always the difference between the cost of production and production costs.” Yu.I. puts a similar meaning into this concept. Prodius, who notes that “gross income characterizes the final result of the production or commercial activities of an enterprise and is calculated by excluding from gross revenue and the results of non-sales operations all costs of production and sales of products included in the cost price, except for labor costs. Thus, income is the proceeds from the sale of products (works, services) minus material costs. It represents the monetary form of the enterprise’s net output, that is, it includes wages and profits.”

Apparently, one should not limit the definition of the concept of “enterprise income” exclusively to that part of it, which in terms of volume characterizes only labor costs and the amount of profit. In modern Western and domestic scientific literature, this part of the income received by an enterprise is defined by the concepts of “Economic Value Added (EVA)” or “net product”. By its economic essence, “economic added value” (“net product”) is one of the forms of income received by an enterprise through the production and sale of marketable products. In this case, we are talking only about a different (limited) composition of the elements that form this income. Thus, the full composition of these components forms “gross income”; with the exception of the element “taxes on income”, “net income” is formed, and with the exception of the elements “taxes on income” and “material costs”, “income in the form of economic added value (“net output”) is formed.

Thus, consideration of the concept of “enterprise income” in a broad sense, both in accordance with economic and accounting approaches, allows us to determine its following main characteristics:

the income of an enterprise is one of the types of financial results of economic activity for a certain period;

this financial result characterizes the receipt of economic benefits;

the main forms of economic benefits that characterize the income of an enterprise are proceeds from the sale of other property, as well as receipts of funds from non-sales operations;

economic benefits that form the income of an enterprise are determined in monetary form.

These basic characteristics of the concept of “enterprise income” require certain additions. From our point of view, one of these characteristics is the high degree of variation in the real value of the amount of economic benefit that forms the enterprise’s income over time. This is due to the fact that the enterprise’s income is determined in monetary form (and the value of money constantly changes over time under the influence of inflation and other factors) and for a certain period (the longer this period is, the higher the degree of change in the real value of the enterprise’s income). Therefore, an objective assessment of the income of a business entity should be based on mandatory consideration of the time factor. In addition, an important characteristic of an enterprise’s income is its high dependence on risk inherent in the economic activities of a particular enterprise. This activity can be carried out in accordance with the aggressive, moderate or conservative policy chosen by the enterprise, which will accordingly affect the amount of economic benefits received (income).

What is "income"? Classifications and full explanation of the concept.

Consequently, an objective assessment of an enterprise’s income should be based on mandatory consideration of such factors as risk.

Taking into account all the considered characteristics of the concept of “enterprise income”, it is proposed to define it as follows: “Enterprise income is one of the types of financial results of economic activity for a certain period, which characterizes in monetary terms the volume of receipt of monetary benefits in the form of revenue from the sale of manufactured products (works) , services) and property, as well as funds from non-operating operations, which are formed taking into account time and risk factors.”

C LIST OF REFERENCES USED

Enterprise economy. - M.: Khimizdat, 2001. - 304 p.

Enterprise economy. - M.: AST, Sova, VKT, 2008. - 32 p.

V.V. Okrepilov. Dictionary of terms and definitions in the field of quality economics. - M.: Nauka, 2011. - 232 p.

Larkov V.N.1

1Siberian Federal University, Institute of Business Process Management and Economics

Income - legal entity

Page 1

Income of legal entities in the form of the difference between the purchase price and the sale price (repayment) of debt obligations is included in the full amount in non-operating income of organizations that are payers of income tax, and for banks and credit institutions - in their other income, and is subject to taxation in in general order.  

As for the income of legal entities from government bonds and other government securities, as well as from the provision of services for their placement, they are excluded from gross profit, since they are not subject to tax at all.  

In general, the harmonization of taxation of income of legal entities is aimed at solving the following tasks: a) eliminating tax obstacles to the process of concentration of European organizations and enterprises and thus stimulating the creation of transnational European companies that can compete more successfully with companies from third countries; b) adoption of common approaches to methods for calculating the taxable base of corporate taxes and elimination of double taxation.  

Now let's look at the procedure for taxing income of legal entities - shareholders from the sale of shares owned by them.  

CORPORATE TAX is a tax on the income of legal entities (capital associations), levied in almost all developed countries.  

Consideration of the issue of taxation of income of legal entities from the sale of shares must begin with the issue of the moment of transfer of ownership of the shares.  

Since 1994, income from legal entities on government bonds and other government securities, as well as from the provision of services for the placement of government securities and reserves of the Federal Treasury of the Russian Federation, which are not subject to income tax, has also been excluded from gross profit. The remaining gross profit after these adjustments is subject to taxation.  

Corporate income taxes are income taxes assessed on the income of legal entities. They belong to the category of direct taxes. Profit taxes determine the amount of mandatory payments companies make to the state budget.  

TAX-FREE INCOME - legally approved deductions from the total taxable income of an individual, as well as income of a legal entity that is not subject to taxation in the generally established manner.  

The greatest advantage in taxation is held by holdings registered and operating in countries that apply the consolidated balance sheet method when taxing the income of legal entities with corporate tax.  

Excluded from gross profit are income from leasing and other types of use of property, as well as profit from intermediary operations and transactions for which tax is calculated in a different manner. Income of legal entities from government bonds and other government securities, as well as from the provision of services for their placement, are excluded from gross profit, since they are not subject to tax at all.  

State participation in structural and investment restructuring is expressed both in direct budgetary allocations and in the implementation of effective tax and credit policies. Reducing tax rates on income of legal entities leads to an increase in profits, which can be used to update and develop production. But this measure is effective only at low inflation. With high inflation rates, this threatens to increase non-taxable income in the sphere of circulation.

Concepts of income, its types and calculation

As for direct budgetary allocations, they are used to finance highly efficient industrial projects on a competitive basis, and not in the form of government preferential lending, but in the form of state participation in these projects. In the Republic of Bashkortostan, an active state policy is being pursued in the field of selling state shares against security in order to obtain additional funds. The state, within the limits of available budgetary funds, provides guarantees to domestic and foreign investors.  

To determine the tax base, the principle of territoriality and residence is important. In accordance with the principle of territoriality, only those incomes of legal entities that are received on its territory are subject to taxation in the state. Accordingly, income received outside the borders of a given state is not included in the income tax base. The residence principle means that tax is paid regardless of the place of receipt of profit in the state of which the legal entity is a resident.  

Pages:      1

ODiplom // Economics // 03/04/2018

Bibliographic description:

Nesterov A.K.

Difference between income, profit and revenue

Income and expenses of an enterprise // Educational encyclopedia ODiplom.ru

The income and expenses of an enterprise are one of the indicators of the enterprise’s activity; they directly affect the process of forming the financial result and the final assessment of the profitability of business activities. Based on these indicators, the rationality, efficiency, stability and prospects for the development of the economic activity of the enterprise are determined.

The concept of income and expenses of an enterprise

As a special economic category, enterprise income expressed in the form of an increase in assets or a decrease in the organization’s liabilities, which entails an increase in the equity capital of the enterprise. In this regard, it should be noted that income cannot be any receipts to the organization. This is confirmed by the legislative definition of the organization’s income, which is enshrined in Accounting Regulations 9/99 “Organization’s Income”:

The income of an organization is recognized as an increase in economic benefits as a result of the receipt of assets (cash, other property) and (or) repayment of liabilities, leading to an increase in the capital of this organization, with the exception of an increase in contributions by decision of participants (owners of property)

Thus, the income of an enterprise includes such receipts of both funds in cash and other assets that correspond to the following list of criteria:

• irrevocable nature of these proceeds;
• the possibility of transforming income into the ownership of the enterprise;
• receipts do not arise as a result of contributions from participants or owners of the enterprise;
• proceeds are fully included in the financial statements of the enterprise and are subject to income tax.

Organization expenses are the inverse economic category in relation to income, representing, on the contrary, a decrease in assets or an increase in liabilities, which, in turn, causes a decrease in the equity capital of a given enterprise. This is confirmed by the legislative definition of the organization’s income, which is enshrined in Accounting Regulations 10/99 “Organization expenses”:

An organization's expenses are recognized as a decrease in economic benefits as a result of the disposal of assets (cash, other property) and (or) the occurrence of liabilities, leading to a decrease in the capital of this organization, with the exception of a decrease in contributions by decision of participants (owners of property).

Thus, the expenses of the enterprise will include payments they make, both in the form of cash and in the form of other assets that correspond to the following list of criteria:

• irrevocable nature of payments;
• loss of ownership of payments made;
• payments do not arise due to a decrease in the contributions of participants or owners of the enterprise;
• payments are fully included in the financial statements of the enterprise and reduce taxable profit.

It can be objectively stated that the process of generating income and expenses is of particular importance for the management of an enterprise in the context of making informed and informed management decisions. To effectively conduct business activities in an organization, financial resources must be used effectively. The formation of income and expenses of an enterprise must be carried out in accordance with current legislation, accounting standards and within the framework of the current taxation system.

Structure of enterprise income and expenses

In the economic and economic activities of an organization, income and expenses are divided into two structural groups:

1. Income and expenses from ordinary activities;
2. Other income and expenses.

Income and expenses from ordinary activities are associated with the implementation of business transactions classified as ordinary activities, while other income and expenses include all other types of income and expenses; this is a fundamental sign of difference.

The structure of the organization's income is shown in the figure.

Income structure of a commercial organization

The following fact should be noted:

For a number of commercial organizations, some types of other income, in accordance with the criterion procedure for their determination, characteristic of most areas of economic activity, may relate to the main type of activity, which implies a different approach to classifying income as other.

Main article – Other income and expenses of the enterprise

Under normal conditions, the income of enterprises includes mainly income from ordinary activities, while other income is incidental to the enterprise. If the usual activities of the organization are those that would normally be classified as others, then the reverse classification applies to them. For example, in accordance with the current classifier of types of economic activities for some enterprises, income from ordinary activities may include interest income, income from participation in other organizations, and income related to the provision of assets for temporary use for a fee, including intellectual property.

The organization's cost structure is shown in the figure.

Cost structure of a commercial organization

Thus, other income and expenses of a commercial organization include such income and expenses that are not the subject of the usual activities of this organization.

Classification of enterprise income and expenses for accounting purposes

For the purposes of tax, management, operational and technical accounting, the categorical classification of income and expenses is also used, which is shown in the figure.

Income and expenses of enterprises are reflected in actual amounts; mandatory regulatory indicators do not apply to the amounts of income and expenses, in relation to which organizations act on the principle of maximizing income and minimizing expenses. It should be noted that in management and accounting systems, attempts to establish the reflection of income and expenses in any relation to norms or standards are not allowed, since this leads to distortion of indicators, and also this approach comes into indirect contradiction with the principles of conducting business activities and organization accounting. At the same time, the practice of determining the planned indicators of income and expenses of an enterprise is widespread; in addition, organizations fix the list of income and expenses, the procedure for their formation and use.

Thus, the company’s income and expenses relate to the economic basis for the formation of the financial result, influencing it in the direction of increase or decrease. The impact of income and expenses on the financial result for most enterprises is significant, since there is an increase and decrease in the financial result to an extent that is critical for all enterprises. In this regard, their detailed study is required in order to make appropriate management decisions based on information generated in this area of ​​the enterprise’s economic activity.

The place of income and expenses in the economic activities of organizations

Enterprise income and expenses within the framework of its economic activity and development are a consequence of the objective functioning of the economic mechanism at enterprises, since the basis of the economic activity of any production enterprise is a set of business transactions that are directly related to the receipt and expenditure of funds. Consequently, these economic categories and analysis of the dynamics of their indicators at the enterprise are a necessary condition for making management decisions on the basis of a reliably significant information picture for the management of the enterprise in modern conditions.

The significance of the analysis of income and expenses is due to the need to take into account all business transactions that are associated with the enterprise’s economic activities, including within the framework of reflecting intra-business processes in the form of final indicators in the profit and loss statement. The company's income and expenses relate to the economic basis for the formation of the financial result, influencing it in the direction of increase or decrease.

The considered procedure for the formation and distribution of income and expenses of an enterprise indicates that this is the main issue of the economic policy of the enterprise. Factors influencing the formation of the amount of income and expenses of an enterprise are divided into formative and mutually influencing factors. The amount of income of the enterprise remaining at its disposal after making all necessary payments and paying taxes is subject to direct distribution, i.e. net profit of the enterprise. At the same time, the income and expenses of an enterprise as special economic categories have a conceptual and methodological basis adjacent to the formation of a financial result, therefore the formation and distribution of income and expenses based on the results of the enterprise’s activities for the reporting period should contribute to economic growth and the progressive development of an economic entity.

Literature

1. Accounting Regulations "Income of the Organization" (PBU 9/99). Approved by Order of the Ministry of Finance of the Russian Federation dated 05/06/1999 No. 32n (as amended by Order of the Ministry of Finance of the Russian Federation dated 04/06/2015 N 57n).
2. Accounting Regulations "Expenses of the Organization" (PBU 10/99). Approved by Order of the Ministry of Finance of the Russian Federation dated 05/06/1999 No. 33n (as amended by Order of the Ministry of Finance of the Russian Federation dated 04/06/2015 N 57n).
3. Lyubushin N.P. Economics of the organization. – M.: Knorus, 2016.
4. Mormul N.F. Enterprise economy. Theory and practice of management. – M.: Omega-L, 2015.