Most of the time, when income is mentioned in accounting, it refers to the gross revenue the company generates.
Income increases a capital account. But, note that not all increases in capital account is an income account. Initial capital and additional contribution likewise increases the capital or equity.
Income increase a capital when such income is recognized as having been earned. See realization principle.
Though income increases capital account, the capital account should not be directly used or be credited when recording an income. It is the proper revenue account which must be credited to record an income. So, for every type of revenue, a distinct account title must be assigned. For examples, see revenue elements.
your article is very informative and written very well. I think you have raised a very good topic that has generated good discussion among the users of your site. it helped me learning a lot.
ReplyDeleteCapital Accounts Collection