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Financial Terms and Glossary

Income

Income

Income refers to the money an individual or business earns through wages, salaries, investments, or other financial activities. For individuals, income typically includes salaries, wages, rental income, dividends, and interest. For businesses, income refers to the total revenue generated from sales of goods and services before expenses are deducted. Income is a primary measure of financial well-being and plays a crucial role in taxation, spending, and saving decisions.

Example

An individual earns $60,000 per year from their job, and an additional $5,000 from investments, giving them an annual income of $65,000.

Key points

• Refers to money earned by individuals or businesses through various sources.

• Includes wages, salaries, rental income, dividends, and business revenue.

• A critical measure of financial health and basis for taxation and financial planning.

Quick Answers to Curious Questions

What are the common sources of income for individuals?

Common sources include wages, salaries, rental income, dividends, interest, and capital gains from investments.

How is business income different from individual income?

Business income refers to total revenue generated from operations, while individual income typically comes from wages, salaries, and investments.

Why is income important for financial planning?

Income determines the ability to save, invest, and spend, influencing an individual’s or business’s long-term financial stability and growth.

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