Economics

Net income in economics definition/Concepts/Examples

Net income

The net income consists of the profits of a company obtained in a specific period of time determining its profitability, it is achieved by subtracting from the total sales all the payments, payroll, services and taxes that must be paid. Net income in economics definition

This income can be used to reinvest in the company or to pay interest to the organization’s shareholders.

Concepts of net income

There are different concepts when referring to net income, among these classifications the following stand out:

  • Net income from foreign factors : it is a representation used in macroeconomics, it covers the remuneration, property interests and current transfers received and paid for the same concepts by a country from the world. Net income in economics definition
  • Net payroll income: the net salary is what the worker receives, it is the income that he can have for his expenses, to know the amount he will receive, deductions such as taxes, social security, etc., have to be subtracted from the gross salary.
  • Autonomous net income: when prescribing the invoices, the withholdings or taxes that correspond either to a company or to an individual are applied.
  • Net income in accounting : refers to income as an expansion of the net worth of a company, it can be due to the increase in the value of its assets, profits or due to the depreciation of its liabilities such as the expiration of a payment commitment.
  • Per capita income: it is the systematization of the income of each inhabitant, their families, companies, etc., related to national income, the quality of life and consumption of society. Per capita income = National income (IN) / Total population (PT)
  • Income of the family nucleus : it is the total of the income that a family has, which includes the salary, extra income for rents or dividends obtained in additional trades to the work that depends on a company. Net income in economics definition
  • Income in economics: it is the total income that enters the budget of an entity, be it private or public, group or individual. These components are part of the social, cultural and political relationships that establish economic stability and quality of life.

Examples of net income

  1. The net income consists of describing the total amount of profits that a company achieves and that it reflects in its accounting report.
  2. It can also be defined as balance and is used as a platform for other specific indicators, including the profit result from operations.
  3. This net income is essential to calculate if a company is profitable, it is the figure that results when accounting for credit accounts, taxes and other deductions. Net income in economics definition

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