Income refers to earnings from labor or capital investments, including savings and the value of personal consumption. It includes gains from business transactions where sale amounts exceed related costs. Income is distinguished from other terms: capital refers to the original investment or funds used to generate income; revenue is funds received by the government from taxes or donations; receipts include both capital and earnings while income excludes capital invested and costs. Nontaxable income is excluded from taxation by law while taxable income is the amount subject to tax rates under law.

2. By: Armia P. Leonardo

3. Income
 amount of wealth accumulated
plus savings and the value of the
personal consumption .
“income” refers to all earning
derived from service rendered
(labor), from capital (business or
investment).

9. Return on Capital
• Sale = income
• Sale must exceed its related cost
• Gain – a profit in excess of capital
as a result of exchange
transactions.

10. Distinctions between
Income and other
terms

11. Capital
Capital Income
 original investment
or fund used in order
to generate earnings
which is called income.
 Wealth
 Service of wealth

12. Illustration
Capital
Income

13. Another Illustration
Capital
Income

14. Revenue
Revenue Income
funds accruing to the
treasury of the
government derived
from tax, donation,
grants and any other
source.
 refers to the earnings
of individual persons,
partnership, corporation
or estate and trust
whether or not subject
to tax.

15. Receipts
Receipts Income
 cash collected over a
business period.
 may include capital as
well as its earning
amount after
excluding capital
invested , cost of good
sold and other
deductions allowed by
law .

16. Nontaxable Income
• Should be excluded by law
or treaty from taxation .

17. Taxable Income
• Amount of income which
the tax rate prescribed by
law.

18. 03-22-15