Measurement of Business Income

<p>Business Income</p> Signup and view all the answers

<p>All of the above</p> Signup and view all the answers

<p>The concept of business income refers to the surplus revenue over expenses incurred by a business. It is significant in accounting as it helps in evaluating the financial performance and effectiveness of a business as an operative unit.</p> Signup and view all the answers

<p>The objectives of determining net income in a business include providing a base for future projections, distributing profits to employees, evaluating activities with higher returns, increasing the wealth of the firm, and paying dividends to shareholders.</p> Signup and view all the answers

<p>According to the American Accounting Association, income is the realized net income of an enterprise, measuring its effectiveness as an operative unit and representing the change in its net assets arising from revenue, expenses, gains, and losses.</p> Signup and view all the answers

<p>Ascertainment of net income helps in evaluating the efficiency of a business by providing a return on income on capital employed, giving an idea of the overall efficiency of the business.</p> Signup and view all the answers

<p>The measurement of business income is important for accountants as it helps in assessing the financial performance, wealth creation, and operational efficiency of a business, and it also serves as the base for future projections and profit distribution.</p> Signup and view all the answers

<p>Surplus revenue over expenses incurred is called as 'Business Income'.</p> Signup and view all the answers

<p>Ascertainment of net income is necessary for paying dividends as it determines the portion of profit available for distribution to shareholders.</p> Signup and view all the answers

<p>The most authentic definition of income is given by the American Accounting Association as 'The realized net income of an enterprise measures its effectiveness as an operative unit and is the change in its net assets arising out of (a) the excess or deficiency of revenue compared with related expired cost, and (b) other gains or losses to the enterprise from sales, exchange or other conversion of assets'.</p> Signup and view all the answers

<p>Historical income figure is the base for future projections as it helps in forecasting and planning for future financial activities based on past performance.</p> Signup and view all the answers

<p>Ascertainment of net income helps in evaluating the activities which give higher return on scarce resources by analyzing the efficiency and profitability of different operations within the business.</p> Signup and view all the answers