ARTICLES ABOUT INCOME

ARTICLES ABOUT INCOME

This article discusses the various definitions of income.
Income or profits can be defined in two ways. Profit in pure economics
defined as the increase of wealth an investor as a result of investor capital,
after deducting the costs associated with such investments
(Including in it, the opportunity cost). Meanwhile, the accounting profit defined
as the difference between the sale price with the cost of production. The difference between them
is in terms of defining the cost. (Wikipedia)

Profit is an element of most concern to users because the expected profit rate enough
rich to represent the company's overall performance. However,
accounting theory has yet to achieve stability in the meaning and measurement of income.
Therefore, unlike other financial statement elements, the discussion of income include
three levels, namely: semantic, syntactic, and pragmatic.

From the engineering point of view of accounting, income concept developed to meet the objectives
provide information about the performance of the company at large. Meanwhile,
information users have different goals. Profit accounting theory faces two
approaches: an income for many different purposes or different purposes of profit.
Directed to formulate the theory of accounting profits with the first approach.
The concept at the level of semantics includes the meaning of income as a measure of performance,
pengkonfirmasi investor expectations, and economic profit estimator. Although accounting does not need
to measure and present the economic profit, accounting at least have to provide
gain information that can be used to measure the users who turn economic profit
to determine the economic value of the company.

The meaning of income in general is to increase kemakmuaran in a period that can be enjoyed
(Distributed or withdrawn), provided that initial prosperity are preserved.
Such understanding is based on the concept of preservation of capital.
This concept distinguishes between income and capital. Significant capital as stocks (stock)
potential services or prosperity while significant profit stream (flow) prosperity.
With the concept of preservation of capital can be distinguished between the return on investment and
return on investment and operational transactions and transactions between owners. Furthermore,
profits can be viewed as changes in net assets so that the various basic assessments of capital
can be applied.

Profit is the increase in capital (net assets) derived from the transaction side or
infrequent transactions of an enterprise, and of all transactions or events
others who have a business entity for a period, except for those arising from income
(Revenue) or the owner's investment (Baridwan, 1992: 55).
The definition of income generally is the excess of income over the fees and charges in
period of time (period) specific. Income is often used as a basis for the imposition
tax, dividend policy, investment guidelines and decision-making and elements of prediction
(Harnanto, 2003: 444).

In economic theory also known as a term profits, but profits in the sense
different from the understanding of economic theory based on accounting earnings. In economic theory,
economists define profit as an increase in corporate wealth,
whereas in accounting, profit is the difference of realized income from transactions
which occurs at the time compared to the costs incurred in a particular period
(Harahap, 1997).

Profit or loss is often used as a measure to assess performance or company
as the basis for another valuation measure, such as earnings per share. The elements
forming part of income is income and expenses. By grouping the elements
revenues and expenses, will be able to obtain different measurements of income include:
gross profit, operating profit, profit before tax and net profit.

Measurement of earnings is not only important to determine the important achievements of the company but also
important as information for determining the distribution of income and investment policy.
Hence, profits into information that is seen by many as the accounting profession,
entrepreneurs, financial analysts, shareholders, economists, tax authorities,
and so on (Harahap, 2001: 259). This causes a variety of definitions for profit.