What is the difference between accounting income and economic income and what do they refer to?

Accounting income can only reflect the increase or decrease of your current profit, but it lacks the concept of opportunity cost.

Accounting Profit = Accounting Income - Accounting Cost.

Economic benefits = economic income - accounting costs + or - opportunity costs.

There are five differences between economic earnings and accounting earnings:

1.Economic returns can more accurately reflect the essence of corporate earnings - the increase of wealth; Accounting returns rely more on artificially designed recognition and measurement models, including many selection, analysis, judgment and estimation procedures, with more attention to form and nominal and emphasis on compliance with specific accounting standards.

2.Economic benefits include not only realized earnings but also unrealized gains, which can fully reflect the full picture of corporate earnings information; Accounting income emphasizes more on business activities, emphasizing concepts such as realization, accrual, proportioning, and history, and does not recognize unrealized earnings.

3.Economic gains place more emphasis on capital preservation, and the original capital (initial capital) must be preserved, and the part that exceeds the initial capital can be recognized as income only after the cost is fully compensated; When inflation is severe, accounting earnings can preserve financial capital, but they cannot reflect the preservation of physical capital.

4.The measurement of economic income is carried out in accordance with the model of "net assets at the beginning of the period and at the beginning of the period", which is only related to the measurement attributes of assets and liabilities, and will not be different due to different accounting models; Accounting income is measured on an "income-expense" basis, which varies depending on the accounting method and procedures used.

5.The measurement results of economic benefits are subordinate to the valuation of assets and liabilities at the beginning and end of the period, and once the valuation method is determined, there is little room for human choice and judgment; Accounting income contains a large number of uncertainties in the process of recognition and measurement, and many places need to be estimated and judged, so that accounting income inevitably has subjective components, and the flexibility of adjustment is greater.

There are a few differences:

First, the characteristics in accounting are different.

1. Characteristics of income.

Revenue is generated from the day-to-day activities of the business and not from occasional transactions or events; Income is the total inflow of economic benefits that are not related to the capital invested by the owner; Revenue only includes payments collected on behalf of third parties or customers.

2. Revenue characteristics.

The accounting income is calculated based on the sales revenue obtained from the sale of products or the provision of labor services by deducting the cost incurred for the actual sales revenue of the enterprise. It is based on the assumption of accounting periodization. Accounting income is subject to the principle of prudence.

2. The calculation basis in accounting is different.

1. The inflow of economic interests of the enterprise is measured by the market value, that is, the fair value, which will inevitably lead to the increase of the owner's equity of the enterprise.

2. The cost of calculating accounting income is measured at historical cost, which depends on the reasonable ratio of income and expenses during the period.

1. The scope of inclusion is different

The investment income includes 20 items, namely, the income from electric power construction, the construction of the Three Gorges Project, the income from road maintenance fees, the income from vehicle purchase surcharges, the income from railway construction, the income from highway construction, the income from civil aviation infrastructure construction, the income from postal and telecommunications surcharges, and the income from port construction fees.

The interest income includes value-added tax, consumption tax, enterprise income tax, resource tax, land value-added tax, urban maintenance and construction tax, real estate tax, land use tax, and vehicle and vessel tax paid by enterprises in accordance with the law.

2. The calculation method is different

The formula for calculating investment income is:

Net operating income = operating income - operating expenses - depreciation of productive fixed assets - production tax + net income from rental housing, net income from leasing other assets and net rent converted from self-owned housing, etc. Net property income does not include premium income from the transfer of ownership of assets.

The formula for calculating interest income is expressed as: real growth rate of per capita disposable income = (per capita disposable income in the reporting period per capita disposable income in the base period) Household consumption ** index hail clear knowledge -100%.

3. The scope of nature is different

Investment income: generally refers to the total quantity and amount produced by industrial enterprises, including unsold inventory that has not yet formed income;

The interest income is the sum of the main business income, operating income, and other business income of source consumption, and the total income of some circulation enterprises is calculated as the difference income, that is, gross profit.

4. The basic unit of accounting is different

The basis of accounting is different, investment income is based on the unit of industrial activities, while interest income is based on the unit of independent accounting.

5. The content is different

The promulgation of investment income has changed the content of the "Accounting System for Small Enterprises" to a great extent, and it draws on the "Accounting Standards for Business Enterprises" in the way it is formulated, and has the characteristics of small enterprises in terms of accounting methods, while the tax norms for interest income have adopted more similar measurement rules with the tax law, which has greatly simplified the coordination between the accounting standards and the tax law. In terms of the influencing factors of profits and taxes, there have also been specific improvements compared with the "Accounting Standards for Small Enterprises".

Encyclopedia - Interest income.

Encyclopedia - Investment income.

Earnings include both revenue and profit. The concept of income is analyzed from the manifestation of income, and the three different forms of income are as follows:

1. Spiritual gain, spiritual satisfaction;

2. The increase of real income and material wealth;

3. Monetary income, which increases the monetary value of assets. Spiritual gains are too subjective to measure, while monetary gains are easy to measure because they do not take into account the static concept of currency value changes.

Accounting Law of the People's Republic of China

Article 26.

Companies and enterprises shall not engage in the following behaviors in accounting:

1) Arbitrarily changing the recognition standards for assets, liabilities, and owners' equity or the method of measuring and pretending to be rented, and falsely, excessively, absently, or under-listing assets, liabilities, and owners' equity;

2) Falsely listing or concealing income, or delaying or early recognition of income;

3) Arbitrarily changing the standards or measurement methods for confirming expenses and costs, falsely, excessively, omittingly, or under-listing expenses and costs;

4) arbitrarily adjusting the method of calculating and distributing profits, fabricating false profits or concealing profits;

5. Lack of reputation) other behaviors that violate the provisions of the national unified accounting system.

In accounting, there are different interpretations of earnings. However, most people believe that the return represents the difference between the output and the input, that is, if a capital is invested, the reward that exceeds the amount of capital is the income. Accounting income, also known as profit or profit, usually refers to the difference between the realized income and the corresponding expenses from transactions with non-business owners during the period.

Its characteristics are: (1) it is a transaction that actually occurs in the enterprise; (2) based on accounting periodization assumptions; (3) Apply the principle of revenue realization, the principle of historical cost and the principle of proportion. This concept of accounting earnings has stood the test of time and has been generally accepted by the management authorities or users of the statements; It is based on actual or real transactions, so its calculations are highly reliable.

As it is based on the principle of revenue realization, it meets the requirements of accounting conservatism; It also helps to reflect management's use of fiduciary resources and facilitates its control and reporting of established fiduciary responsibilities.

Proceeds are natural or statutory receipts for the propertyFruits。The right to proceeds may also be acquired by a non-owner in accordance with the provisions of the law or the consent of the owner. Productive or commercial incomeOperating incomeand get benefits.

Economic concepts. Historically, the concept of income first appeared in economics.

Adam smith.

In The Wealth of Nations, earnings are defined as "that portion of the expendable amount of capital that does not erode capital" and is seen as an increase in wealth. Later, most economists inherited and developed this view. In 1890, Alfred Maarshell wrote in his Principles of Economics

In this paper, he introduced Adam Smith's "increase in wealth" as a concept of returns, and proposed an economic return that distinguishes between real capital and value-added income.

In the early 20th century, the famous American economist Irvin Fisher developed the theory of economic returns. In his book "The Nature of Capital and Income", he first analyzed the concept of income from the manifestation of income and proposed three different forms of income.

1) Spiritual Harvest - Spiritual Satisfaction;

2. The increase of real income and material wealth;

3. Monetary income, which increases the monetary value of assets. Among the three different forms of income mentioned above, there are both measurable and non-measurable. Among them: mental gains due to subjectivity.

Too strong to measure, monetary returns are easy to measure because of a static concept that does not take into account changes in the value of the currency. As a result, economists focus only on real returns.

Difference Between Accounting Earnings and Economic Gains:

Accounting profit and economic profit are two different concepts.

1. Accounting profit refers to the operating results of the enterprise, mainly considering the production factors measured in currency, and the calculation formula is the total income minus all accounting costs.

2. The economic balance He Run refers to the difference between the total income and the economic cost of the manufacturer, that is, the total opportunity cost, which is calculated as the total income minus the explicit cost and the implicit cost.

3. The difference between the two is mainly in the service subject, the purpose angle, the measurement scope, the measurement basis and the cost measurement. The purpose of accounting profit service is to users outside the enterprise, in order to objectively reflect economic activities and provide a reliable basis for profit distribution; And economic profit is from the company's point of view, considering more opportunity costs.

1. Different definitions.

1. Accounting profit refers to the profit left by the owner of the enterprise after paying all the elements except capital.

2. Economic profit refers to the difference between the manufacturer's income and its cost, which includes the income that can be obtained from the use of the most advantageous other manufacturer's resources.

Second, the calculation caliber is different.

1. Accounting profit is a comprehensive reflection of the income, cost and expense of the enterprise in a period of time, that is, the operating results, that is: accounting profit balance = income - cost - period expenses (including: financial expenses).

2. Economic profit is the value of the part of the company's investment capital gains that exceed the weighted average cost of capital, that is: economic profit = income - cost (including: cost of input capital) - period expenses, which can also be understood as economic profit = accounting profit - opportunity cost.

When the invested capital of the enterprise is greater than zero, the economic profit will always be less than the accounting profit.

The difference between earnings and income is ** and nature.

Income refers to the inflow of money or non-monetary forms received by individuals or organizations from various economic activities, including wages, salaries, interest, dividends, etc. It is usually created through work, investment in resistant fluids, or other economic transactions. Income can be used to pay for everyday expenses, meet basic needs, and accumulate savings.

Benefits, on the other hand, more broadly encompass all types of value-added and are not limited to monetary aspects. It refers to the net profit, value added, or benefit realized by an individual or organization in an activity. In addition to monetary returns, there are also other qualitative factors such as reputation enhancement and skill development.

1. The difference between income and profits.

Revenue refers to the owner's equity that is formed in the day-to-day activities of a business.

Increase、With the owner invested capital。

The total inflow of unrelated economic benefits. Profit refers to the inflow of economic benefits that are formed by the non-routine activities of the enterprise and will lead to an increase in the owner's equity, and are not related to the capital invested by the owner. The essential difference between the two is that income refers to the formation of the enterprise in its daily activities, and profit refers to the delay in the formation of the enterprise's non-daily activities.

For example, industrial companies manufacture and sell products, commodity distribution companies sell goods, insurance companies issue insurance policies, consulting companies provide consulting services, and software companies develop software for customers.

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2. The difference between profit and loss.

1. Profit is the business result of the entrepreneur, the comprehensive reflection of the business effect of the enterprise, and the concrete embodiment of its final result. Profits are not only qualitatively identical, but also quantitatively equal, and the only difference in profits is surplus value.

is for variable capital, and profit is for all costs.

2. Loss refers to the net outflow of economic benefits that are not related to the distribution of profits to the owners that occur due to the non-routine simple activities of the enterprise, which will lead to the reduction of the owner's equity. Specifically, it refers to the fixed assets incurred by the enterprise in its production and business activities.

and inventory loss, damage, scrapping loss, transfer property loss, and bad debts.

Losses, bad debt losses, natural disasters and other force majeure factors.

and other losses.

1. Differences:

1'Definition: Accounting income refers to the earnings reflected in the books, and economic gains refer to the actual increase in the company's assets.

2. Calculation: Accounting income can only reflect the increase or decrease of current profits, but it lacks the concept of opportunity cost - accounting profit = accounting income - accounting cost;

Economic benefits = economic income - accounting costs + or - opportunity costs.

2. Example: For example, if you buy a house for 1 million yuan and 1.5 million yuan in the second year, the income of 500,000 yuan cannot be reflected in the accounting account, so the 500,000 yuan is the economic benefit;

Addendum: Accounting income: refers to the concept of income in accounting. It refers to the difference between the realized revenue from transactions during the business and the corresponding expenses.