Income of the organization: types, accounting

The concepts of "income" and "revenue" of the company, at first glance, are identical, however, there are differences in their definitions.

Under the income should be understood the total amount of funds in the form of money that the company receives as a result of its activities. This also includes understanding the increase in the benefits of the company due to the increase in equity.

Concept

A detailed interpretation of the methods of generating income and their classification is contained in PBU "Income of organizations".

Income is understood as the total benefit of the company as a result of its work. The appearance of income is associated with an increase in equity of the company.

A situation is possible where income is equal to the amount of revenue, but, as a rule, there are many incomes, and the company’s revenue is one.

Essence

The company's income is an increase in the amount of money received over expenses for the funds consumed in the production process that the company receives from the sale of the created value.

The production process of creating goods is the process of production of the consumption of means of production and labor. At the same time, the value of the means of production does not disappear. With the use of labor, it is partially transferred to the product they created.

At the same time, the living work creating this product as such creates a new value that did not exist before the production process.

Consequently, the cost of production (BB) of any product consists of the cost of the consumed means of production (VSZ) and the new value (Ext):

BB = Sun + Ext.

The newly created value is a source of reproduction of labor consumed in the production process. If this value exceeds the value of the product, an excess appears - the value of the excess product or value added.

Due to the modern level of technical and technological equipment of living labor, it is able to create new value during the working day, more than the need for the reproduction of labor.

For any enterprise, there will always be a difference between gross income (“sales amounts”, that is, the amount of money received by the enterprise from the sale of products) and the cost of the means of production consumed.

Accounting value

Accounting for company revenues is important, first of all, from the point of view of effective business planning, despite the fact that the provision of relevant documents is also related to the requirements of the law.

The company's management, considering the above documents, can observe the dynamics of profit formation in the enterprise, track its dependence on the rate of investment.

Accounting for income is also important for investors, and in some cases for potential lenders, partners and customers of the company. Corresponding data sources allow them to evaluate the company in terms of sustainability, business model effectiveness.

Classification

Depending on the definition of sources of revenue generation, their various types are distinguished. In accordance with this criterion, the following types of income of the organization are distinguished:

• income generated by the main business of the company;
• income from other activities.

An important classification feature is the classification of income by the composition of the elements. In accordance with this classification criterion, one can distinguish gross income (that is, the total amount of income received by an enterprise of this type) and net profit from operating activities.

It is possible that these two types of operating income may be supplemented by another type: “value added”, that is, income in the form of economically added value.

Sometimes income from operating activities is divided into the economic content of the operations that form them. For this purpose, the following types are distinguished:

• income from sales and sales;
• non-operating income that is generated in the process of operating activities (income from fines, penalties, from receivables for loans that arose during the operating cycle, receipts from current assets received free of charge, etc.).

The next criterion is the recognition of income in the financial statements. Here are distinguished:

• income for the reporting period (income that should be received in the reporting period);
• income that should be received but not received in the reporting period;
• deferred income (income that should not be received in the reporting period and received, respectively, not in the reporting period.

According to the tax classification, the entire amount of income from operating activities received by an enterprise is divided into taxable income and non-taxable income.

Revenue Impact Factors

From the calculation of the income of the enterprise it follows that its value is influenced by the main factors:

• selling price;
• volume of sales;
• the amount spent on production.

There is a direct correlation between income and price level, as well as sales volume. And with income costs, the relationship is inverse.

At the same time, there is a direct proportional dependence of enterprise incomes on prices and volumes of production and inversely proportional to the costs of the means of production.

The ratio of the concepts of income, revenue and profit

Revenue is the profit from the direct activities of the company. The concept of revenue is determined solely by business and entrepreneurship.

The main differences in the company's income and revenue are shown in the table:

Under the profit understand the difference between total income and total expenses (including taxes).

In order to calculate profit, it is necessary to collect all incoming funds and subtract all costs incurred from the amount received.

The profit of the company is formed due to profits and losses received from all areas of activity.

The differences between the profit and income of the organization are formed based on the following points:

• purchase price of the goods;
• rental of commercial premises;
• organization income tax;
• staff salary;
• transport and communications, office supplies;
• interest on a loan for commercial equipment.

Income is the funds that the entrepreneur received and can spend at his discretion. Profit - balance of funds minus all expenses.

Legislative regulation

The composition and procedure for generating revenue are regulated in accounting under the Accounting Regulation PBU 9/99 “Income of Organizations”.

According to RAS 9/99, the organization’s income is an increase in economic benefits resulting from the receipt of assets (shares, cash, other property) or repayment of obligations, which leads to an increase in the organization’s capital.

In accounting, revenues are classified as follows:

• main income: income from ordinary activities, income from the sale of goods;
• other income: operating income, providing temporary use of the organization’s assets, granting for compensation rights arising from patents for inventions;
• non-operating income: fines, assets received free of charge, including under the deed of gift, past profit identified in the reporting year, amounts payable and withheld overdue for which the statute of limitations has expired, exchange differences, revaluation of surplus assets.

For tax purposes, income includes:

• sales income;
• income from the sale of manufactured goods.

Accounting principles

In accounting for the organization’s income, there are the following basic principles for accounting for company income:

• the principle of objectivity - all business operations should be displayed in the accounting method by continuous recording on accounts provided by the chart of accounts in ruble terms;
• double entry principle - any movement of the company's assets and liabilities is displayed simultaneously on the basis of Dt of one account and by CT of the other based on the primary documentation;
• accrual principle - information is displayed on the account, as it happens in the reporting period in which it was made, and not upon payment;
• compliance principle - the income of the enterprise should be correlated with the costs.

Organization of accounting

Accounting for the organization’s income and expenses is carried out using the double entry method using special accounts. Analytics are carried out for each type of income with the ability to determine the financial result for individual transactions.

To account for income account 90 "Sales" is provided.

Account 90 is active-passive, used to reflect information related to the sale of finished products. An account is one of the most difficult in terms of accounts. Its peculiarity lies in the fact that at the end of the period it should be closed without a trace.

The main opened sub-accounts:

• 90.1 "Income" - to account for income as revenue.
• 90.2 "Cost" - to account for expenses.
• 90.3 “VAT” - for tax purposes.
• 90.4 “Excise taxes” - to include excise taxes.

Account 90 is intended to summarize information on income and expenses and their comparison. The difference will be that a specific business transaction will be reflected in the debit or credit of this account.

Revenues in account 90 are reflected in the loan, and expenses in the debit.

Therefore, when revenue is recognized in accounting, the posting is usually generated as follows:

Dt 62 "Settlements with customers and customers" - Kt 90

At the same time, the cost of sales is debited with the following accounts:

Dt 90 - Kt 20, 41.43.

In addition, the costs of the sale, as well as other expenses directly related to accounting for sales, are written off to the debit of account 90. Therefore, according to Dt 90, postings can also be as follows:

Dt 90 - Kt 26, 44.

Analytical accounting on account 90 is supported for each type of goods sold. Analytical accounting can be carried out by sales region and area.

Synthetic score 90 at the end of the month should not have a balance. Therefore, at the end of the month, postings are made to close this account. For this, debit and credit turnover is compared among themselves. If the credit turnover exceeds debit, we can say that for a month the profit of the organization is as follows:

Dt 90-9 - Ct 99.

If the relationship is the opposite, then the organization ended the month at a loss, and account 90 closes as follows:

Dt 99 - Ct 90-9.

At the end of the year, not only the financial result for December is shown, but also that all sub-accounts on account 90 are closed. The so-called reformation of the balance is carried out.

Conclusion

Organization revenues and organization goals are interdependent concepts. The organization of the correct accounting of income is the main aspect of the activity of enterprises of any scale.

The fiscal authorities pay close attention to the procedure for recording income by taxpayers. At the same time, tax accounting is significantly different from accounting, and therefore accountants must develop additional accounting registers.