Income

From WikiMD's Wellness Encyclopedia

Income is the consumption and savings opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.[1]

Definition[edit | edit source]

For households and individuals, income is the sum of all the wages, salaries, profits, interest payments, rents, and other forms of earnings received in a given period of time.[2] For firms, income generally refers to net-profit that is, what remains after operating expenses, interest and taxes are subtracted from gross revenue.[3]

Types of Income[edit | edit source]

Income can be categorized into two types:

  • Active Income: This is the income earned by performing a service. This includes wages, tips, salaries, commissions, and income from businesses in which there is material participation.[4]
  • Passive Income: This is the income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it.[5]

Income Distribution[edit | edit source]

Income distribution is how a nation’s total GDP is distributed amongst its population.[6]

Income in Different Disciplines[edit | edit source]

In different disciplines, the term income has different meanings:

  • In economics, income distribution is the smoothness or equality with which income is dealt out among members of a society.[7]
  • In personal finance, income is what is received as a wage or salary and is either consumed or saved.[8]
  • In accounting and taxation, income is the increase in wealth that an entity has from its activities.[9]

See Also[edit | edit source]

References[edit | edit source]

Income Resources

Contributors: Prab R. Tumpati, MD