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Profit simply means revenue that remains after expenses.
Definition income vs profit. When a company is profitable we mean that the company has a positive net income. Net income is used to calculate earnings per share for equity shareholders while the net profit is used to show the profitability position of the company. Profit revenue other income total expenses. Income is money what an individual or business receives in exchange for providing labor producing a good or service or through investing capital.
The income arose after deducting preference dividend from net profit is the net income. Some people intend for the terms income and profit to have the same meaning. Revenue is shown in the first line of the income statement. While revenue and profit both refer to money a company earns.
Both terms deal with the positive flow of cash. Revenue is the top line of the income statement whereas the profit is the bottom line. What is the difference between income and profit. The pure profit earned by a company in a particular accounting year is known as net profit.
While revenue includes the gross earning from primary operations without any deductions profit is the resultant income after accounting for expenses expenditures taxes and additional income and costs in the revenue. Profit is the net amount left positive after deducting all costs expenses and taxes from the revenue. In general profit is the reward for the risk taken by the entrepreneur in the business. Profit works as a tool in the calculation of tax of the enterprise.
The key difference between profit vs income is that profit of the business refers to the amount realized by the company after deducting the expenses from total amount of revenue earned during an accounting period whereas income refers to the amount left as the earning in the organization after deducting other expenses such as dividends etc from the profit amount. Profit is the amount of income that remains after accounting for all expenses debts additional income streams and operating costs.
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