Concept

Income (United States legal definitions)

Summary
In U.S. business and financial accounting, income is generally defined by Generally Accepted Accounting Principles (GAAP) and the Financial Accounting Standards Board as: Revenues – Expenses; however, many people use it as shorthand for net income, which is the amount of money that a company earns after covering all of its costs as well as taxes. Net income is also called net profit. It is calculated as follows:

The gross income or revenue is tabulated.

Where applicable, the cost of goods sold or cost of operations figure is subtracted from the gross income to yield the gross profit.

All expenses other than the COGS or COO are subsequently subtracted from the gross profit to yield the profit or income – or, if a negative number, the net loss (usually written in parentheses). More commonly, this is reported on the income statement as "income (or loss) before taxes".

Taxes are then subtracted from the pre-tax income to give a final net income or net profit (or net loss) figur

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