What are income accounts? and its importance

The importance that it represents what are income accounts in the management and control of a company, where the profit and loss at the end of the year is evidenced, it can be detailed in the following article.

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Company profit or loss statement

What are income accounts?

In order to be able to refer to what are income statements also called capital accounts, where the records of the different spending and selling operations that a company can carry out can be made in order to determine the profit or loss status of the firm; whose purpose is to indicate the final financial means of the organization, this accounting instrument in the same way shows the causes that have caused this situation, positive or negative.

The period of time given to register and obtain the result is the time mechanism that the company establishes to be aware of the effect of its spending and marketing operations; This period can be established monthly, bi-monthly, semi-annually, annually, four-monthly, quarterly, among others depending on what is stipulated by the employer; where you can see the income and expenses in general. Revenues are all payments received, whether in currency, merchandise, the canon of services or sales of products.

The nature of the income is credit and can be recorded with: sales, all the company's sales are recorded in this line; returns and rebates on sales are of a debtor nature; financial products, everything related to banking entities and their derivatives; other products, other activities that are not frequent in production.

The expense is all the distribution that the company executes to obtain the necessary costs to offer the product or service that it promises to the client. They can be divided into: costs, direct expenditure made for the purchase of income, be it raw material, company materials, and more where you cannot stop purchasing; Another division refers to expenses, being all indirect distribution made for the acquisition of income, goods or products that are not required for production and can be omitted in the purchase.

In companies, expenses are generated that must be distributed in the correct way so that a balance and control of your finances can be maintained, if you want to know more about it, we recommend reading about the amortization.

Importance 

This type of accounts is very useful to manage the evolution of a company within the financial area; It allows to show the final results in different stages, whether profit or loss, in this way the economic situation of the company can be directly evaluated; where you can grant dividends to your employees from the utility benefit, as long as it has been profit for the firm.

Likewise, it is relevant because it facilitates the calculation of EBITDA (Earnings before amortization, provisions, interest and taxes) in order to be able to measure the derivations that are generated by the company's habitual action without taking into account matters related to amortization, neither interest nor financial state. The results accounts facilitate the calculation of interest and taxes that must be paid; great help for business management, calculation of fiscal and financial interests, organization and budget.

The different calculations that can generate expenses and determine investments are known as profitability, dear reader, we recommend you read about annualized return, where its limits, advantages and various examples are explained.


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