In accounting, income is defined as an increase in economic resources (assets) of an entity, whether arising in the normal course of business (ordinary activities) or not, or from the settlement of liabilities (e.g., repayment of an outstanding loan by means of assets other than monetary assets such as goods produced by the entity).
By composition, income consists of revenues and gains. Revenues are increases in economic resources that arise in the normal course of business/ activities, including sales, rent, dividends, royalties, interest, fees, etc. On the other hand, gains are similar in nature to revenues: an increase in economic resources available to an entity. However, gains may, or may not, arise in the normal course of business/ activities. Examples of gains include sales/ disposal of fixed assets / long-term assets or broadly non-current assets.
Income items may also encompass paper gains (unrealized gains) which arise, for example, on the revaluation of marketable securities or from increases in the carrying amount of long-term assets.
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