In business, income refers to the money and other revenues acquired in the sale of products as well as services in the ordinary course of business operations. Plain income is referred to as gross income; if it is decreased by business expenses, costs, and write-offs associated with it, it is called net income. Example of income for a merchandising business is sales; for a dentist is dental or professional income; and for an apartment is rental income. Income is displayed in the company’s income statement, or statement of profit and loss, a business financial statement intended to be made for a particular period, say monthly or annually. Income in business indicates the presence or loss of money, the main fact that concerns managers, business investors, and the public in the course of the business’ life. An income statement is a corresponding statement that goes with the balance sheet, another financial statement showing the company’s financial position.
On the other hand, the term expense, or expenditure, denotes a company’s outflows of money and other assets while in the process of production, on top of other purposes. It is used to pay a person or company for a particular item, service, and other various costs. This is deducted from the gross income to arrive at the net income of the business. An expense occurs when an asset is utilized or a particular liability is acquired. An expense reduces the owner’s equity in relation to the so called accounting equation: Assets = Liabilities + Owner’s Equity. Rent is considered an expense of a tenant, while office supplies is expense to a business establishment. The basic needs of a person, such as food, housing, and clothing are viewed as expenses. Moreover, if something costs too much, it is called expensive; and inexpensive, if it costs a little. Like income, expense is recognized for a particular period.
Aside from income and expenses in the ordinary course of business, there are also those considered as other income and other expenses. Other income is earnings gained other than those from the ordinary operations of a business. This may comprise of gains from foreign exchange, investment interest, profit acquired from non-inventory assets sold, and rent income for business not centered in leasing operations. Likewise, other expenses cover certain costs and expenses in line with activities not included in the central operations of a company. Other expense includes postage, stipends, freight, and publication costs.
However, in insurance, income portrays all cash flow sources. It is usually stated annually in business reports.
A person who became incapable of executing certain tasks or occupational duties, either for a short while or long-standing, or for the rest of his life, may apply for disability income insurance. This policy is usually tax free and is intended to replace at least a portion of the income that could have been earned had the person not contracted disability.
The term other income/expenses in insurance stands for miscellaneous operating income sources that are in line with income for premium finance and uncollectible premium charges, as well as reinsurance business.