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Income represents the total amount of money that your business earns or derives within a certain period of time. It is made from revenue and gains or losses.

Revenues are the money inflows that result from the performance of day-to-day business activities and business investments.

Performance of day-to-day business activities consist of either the receipt of cash or the right to receive cash in the future such as accounts receivable. Usually this occurs through business sales made for the provision of goods or services made in cash or credit. The sales figure used is net sales after deducting discounts given, returned goods and allowances such as for Goods and Services Tax.

Performance of business investments may be earnings derived from shares in another company or from a loan which was provided a loan to another business. Hence, the dividends made on those shares and the interest received from the loan is revenue.

If the business decides to sell its business assets, a gain made from the sale is income and is disclosed separately from revenue on the profit and loss statement. A gain or loss is calculated by subtracting the proceeds from the sale of the asset from the book value of the asset. If a loss is made on the sale of a business asset the loss is still recognised in the business' profit and loss statement.

You can calculate the income for your business by following the template below: