BASIC CONCEPTS OF INCOME

BASIC CONCEPTS OF INCOME in Accounting

The accountants' approach to the transaction (transaction approach) and the concept of price
exchange (exchange price) as the basis for income measurement. The main reason for the use
approach and thus the price is because the transaction actually happened and
exchange price is objective and verifiable truth.
Approach transaction and exchange rates as the basis for income measurement is not without
weaknesses or limitations. One disadvantage of using the concept of exchange rates
is because the income is measured only by the number of absolute dollars,
without considering that the possibility of changes in price levels or decrease in power
buy / inflation.

An income, including gains derived or deemed not yet realized
to income and / or benefits may be associated with the transaction or
Certain events can cause the emergence of income and / or profits.
That is, services must be provided or goods must be sold, transferred, exchanged,
or converted into other goods or services in advance;
before a number of income and / or gains deemed to have gained (earned),
realized (realized), or can be realized (realizable). Concepts related
with the current recognition of income and / or similar benefits by the accountant or
in accounting is often referred to as a concept or principle of realization of income.

In essence, income is equal to the total value of goods and services
consumed in a period plus the increase in capital value or wealth
relevant period. However, in measuring the change in net worth or capital;
accounting concepts using the exchange price (historical cost or acquisition value and
not the value or the current price or current value).
Therefore, the exchange price (historical cost or acquisition value) does not change as
due course of time, then no change in values that need to be recognized or recorded until
with the occurrence of a transaction at a later date. As a result,
according to accounting concepts do not admit the benefits are not realized as a
income component. But on the contrary, according to accounting concepts; losses likely
big will happen and it can be quantified in many ways should be recognized.