Accounting for Income

Introduction account income is often used as the theme for an indication of the burden of operation of an entity, a criterion of dividend payments, the background for taxation on income, a determining factor in wage fixing, a guide to management and so on. gesture 1 Economist generally defined income in scathe of well-offness. The purpose of income calculation in practical personal trade is to bewilder people an indication of the amount that they can give without impoverishing themselves (Hicks, 1946, p.172). However, the chronicle rules that define the measurement of income ar relatively ad hoc. Revenue/expense measurement and credit entry guidelines atomic number 18 independently described in SAC 4. Periodic report income appears in the main the result of applying the coordinated principal, once grosss and expenses are recognised. These traditional definitions which clearly represent the narrow revenue-expense nest suggests louvre characteristic of account ing income (Accounting Theory, 1993, pg.268). a)Accounting income is based on the actual achievement entered into by the firm, primarily revenues arising from the sales of goods or services minus the costs of these sales. Conventionally, the accounting profession has used transaction approach to income measurement. b)Accounting income is based on the period postulate and refers to the financial process of the firm during a given period.

c)Accounting income is based on the revenue principle and requires the definition, measurement, and citation of revenues. In general, the realisation principle is the canvas for the recognition of rev enues and, consequently, for the recognition! of income. d)Accounting income requires the measurement of expenses in terms of the historical cost, constituting a set adherence to the cost principle. e) Accounting income requires that the effected revenues of the period be related to appropriate or correspondent relevant coast. Accounting income is therefore based on the matching principle. Edwards and Bell (1961) had widened the cathode-ray oscilloscope of... If you want to get a sound essay, order it on our website: BestEssayCheap.com

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