Answer in one sentence only. What do you mean by indirect incomes? - Book Keeping and Accountancy | Shaalaa.com (2024)

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Answer in one sentence only. What do you mean by indirect incomes? - Book Keeping and Accountancy | Shaalaa.com? ›

Solution. All incomes other than direct incomes are called indirect incomes. [e.g. Interest received on investments, Incomes like discount, commission, dividend, rent etc. received].

One that is gained from non-business activities is indirect income. Sales of old newspapers, sales of cardboard boxes for instance, etc. Newspapers, old cutlery, bottles and cans, and other items are likely to be found in the same coffee shop. You may either hold them or throw them away.

Meaning. Trading account used to find the gross profit/loss of the business for an accounting period. Profit and loss account or Income statement is used to find the net profit/loss of the business for an accounting period.

Whereas the revenue derived from sources other than your business is indirect income. An example of direct income is the active income of a business, and an example of indirect income is selling old newspapers and bottles.

A balance sheet is a financial statement that contains details of a company's assets or liabilities at a specific point in time. It is one of the three core financial statements (income statement and cash flow statement being the other two) used for evaluating the performance of a business.

Direct income if the same is the major revenue of the organization, for eg a school/institute, coaching centers etc. Indirect income if it's not the primary income, for eg a part time tuition teacher etc.

Utility bills, rental costs, salaries, depreciation, office supplies, and legal charges are a few examples of indirect expenses. Companies must bear these charges to keep running smoothly regardless of the products they manufacture or sell.

The incomes which are earned from the non-operational activities of the business are known as Indirect Income. In other words, income earned from the sale of scrap or profit earned from the sale of any assets. These Incomes are separated to calculate the Net profit of the business in a particular financial year.

A profit and loss statement is calculated by taking a company's total revenue and subtracting the total expenses, including tax. If the resulting figure – known as net income – is negative, the company has made a loss, and if it is positive, the company has made a profit.

What is net profit? Net profit is the amount of money your business earns after deducting all operating, interest, and tax expenses over a given period of time. To arrive at this value, you need to know a company's gross profit. If the value of net profit is negative, then it is called net loss.

What is an example of indirect income? ›

Direct income is one which is earned directly by way of business activities. Indirect income is one which is earned by way of non-business activities. For example, sale of old newspapers, sale of carton boxes, etc.

Revenues earned through activities other than the routine activities of the business are called indirect revenues.

What is direct & indirect income? Direct income is income earned from activities directly related to your business which are undertaken to earn the income. While indirect income is income from other activities which are not directly related to your business.

What are the Golden Rules of Accounting? 1) Debit what comes in - credit what goes out. 2) Credit the giver and Debit the Receiver. 3) Credit all income and debit all expenses.

A balance sheet gives you a snapshot of your company's financial position at a given point in time. Along with an income statement and a cash flow statement, a balance sheet can help business owners evaluate their company's financial standing.

A bad debt is a monetary amount owed to a creditor that is unlikely to be paid and, or which the creditor is not willing to take action to collect because of various reasons, often due to the debtor not having the money to pay, for example, due to a company going into liquidation or insolvency.

Direct income is one which is earned directly by way of business activities. Indirect income is one which is earned by way of non-business activities. For example, sale of old newspapers, sale of carton boxes, etc.

Similarly, if you have a workshop that you use for manufacturing but you rent it out for a photography shoot, that's also indirect revenue.

Key Differences between Direct and Indirect Expenses

Examples: Direct expenses include raw materials, direct labor, and other costs directly incurred in the production process. Indirect expenses encompass items such as rent, utilities, administrative salaries, and other overhead costs.

Indirect income involves earnings from non-business activities. Few examples for indirect income involves selling old newspapers, used papers, recycling wastes, etc. It also includes earnings from the dividents obtained, sale of assets, commissions, and interest obtained from investments.