Difference between Income and profit
1. Meaning
In business the term income and profit has different meaning
and cannot be interchangeable. Income is gross inflow of economic benefit (Cash)
where the profit is net inflow of economic benefit.
2. Net inflow
Net income is net
inflow of economic benefit and calculated after deducting the relevant expense
from the income which was incurred to generated income. Profit or net profit is
net inflow of economic benefit in case revenue or sale.
3. Different business
Normally in services industry and the terminology of income
and net income is used income is the gross inflow and net income is net inflow
of cash.
In trading of good
and industry the term revenue and profit are used instead of income and net
income. Revenue is the gross inflow of economic benefit and profit is net
inflow of economic of benefit.
Examples of profit
Mr. A has made a sale
of $2000 and his expenses during the year were $ 1700.
Solutions
Profit is $ 300 ($
2,000- 1,700)
Examples of profit
Mr. A has earned a commission of $2000 as property agent and
his expenses during the year were $ 800.
Solutions
Income is $ 1200 = ( $ 2000- $ 800)
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