In microeconomics, income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.[1][2][3]

For households and individuals, income is a sum that includes any wage, salary, profit, interest payment, rent, or other form of earnings received in a given period of time[4] (also known as gross income). Net income is defined as the gross income minus taxes and other deductions (e.g., mandatory pension contributions), and is usually the basis to calculate how much income tax is owed.

In the field of public economics, the concept may comprise the accumulation of both monetary and non-monetary consumption ability, with the former (monetary) being used as a proxy for total income.

For a firm, gross income can be defined as sum of all revenue minus the cost of goods sold. Net income nets out expenses: net income equals revenue minus cost of goods sold, expenses, depreciation, interest, and taxes.[3]

  1. ^ Smith's financial dictionary. Smith, Howard Irving. 1908. Income is defined as, "Revenue; the amount of money coming to a person or a corporation (usually interpreted as meaning annually) whether as payment for services or as interest or other profit from investment."
  2. ^ Webster's new modern English dictionary, illustrated. Webster, Noah. 1922. Income is defined as "the gain which proceeds from labor, business, property or capital; annual receipts of a person or corporation."
  3. ^ a b Barr, N. (2004). Problems and definition of measurement. In Economics of the welfare state. New York: Oxford University Press. pp. 121–124
  4. ^ Case, K. & Fair, R. (2007). Principles of Economics. Upper Saddle River, NJ: Pearson Education. p. 54.

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