Difference Between Income Vs Profit

When a company is profitable we mean that the company has a positive net income.

Difference between income vs profit. What is the difference between gross profit and net profit. Revenue is the gross amount i e. The profit and loss account account not statement is one of the t accounts. The income statement is a statement a report which forms part of all the financial reports called the financial statements.

While net income is synonymous with a specific figure profit conversely can refer to a number of figures. Profit simply means revenue that remains after expenses and corporate accountants. Without any deductions while profit and income are derived after deductions of expenses and taxes. Gross income or profit is the total amount of money you earn and net income is your real business profit after expenses and allowable deductions are removed.

Thus it is also referred to as profit after tax pat or net earnings. Net income is the profit available for company s shareholders after the tax payment. Income indicates the amount that is earned whereas profit can also said to be positive number that is obtained after subtracting expenses from the income revenue. Below are the main differences between profit vs income profit is the amount which is left over after paying for expenses such as raw materials salaries tax interest or other overheads from the income in the firm but income is the amount received from business activities whether from direct or indirect sources.

However since we use gross income to calculate net income these terms are easy to confuse. Net profit will be used to pay dividends to shareholders and or transferred to earnings reserved. 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. For example the income statement was commonly referred to as the profit and loss p l statement.

Revenue is divided into operating and non operating revenue profit is classified as gross and net profit and income can be classified as earned and unearned income. Some people intend for the terms income and profit to have the same meaning. In other words it is the net increase in shareholder s equity.