BASIC CONCEPTS OF INCOME

BASIC CONCEPTS OF INCOME in economic

Economists define income as the amount (of goods and services) which in the long
certain time can be consumed by an entity, without leading to a reduction of capital.
Economists use the capital maintenance approach
(Equity or capital maintenance approach) in determining the income of an entity in
a period.

Income = (Capital End) - (Initial Capital), or
Income = (Consumption Value of Goods / Services) / - (Change Capital)

With the approach of equity, the size of income within a period specified by
I compare the total value or market price (fair market value) of capital or
net assets at the end and beginning of the period involved (except from the deposit and
redemption of capital). Income is measured based on the increase (or decrease) in net worth
or capital owned by an entity plus the value (market price) of goods
or services consumed in a period.

Thus, according to the economic concept of income is equal to the number of
value (market price) of goods or services that are actually consumed by an entity
plus the increase and / or reduced decline in value of goods or services which may or
willing to be consumed at a later date or in subsequent periods.

Economic concept of income underscores the value of goods and / or services which may
consumed or the ability of an entity's consumption. Income is measured based
ability of an entity to mengkonsumsikan goods and services, which often also
referred to as purchasing power (purchasing power) or real income (real income).
Three fundamental aspects in the economic concept of income:

Economic concept of income is a concept that is very wide-ranging.
Economic concept of income includes gains and losses, either already or
Unrealized (realized and unrealized gains and losses). The concept of eco

nomik of income required for consideration of the effect or influence change
level of prices, declining purchasing power of money or inflation.