Expenses and Income

INCOME - EXPENSES = PROFIT 

Expenses 
This is the money spent by a business in order to run the day to day activities of the firm.

Examples:
  • Electricity 
  • Wages 
  • Salaries 
  • Insurance 
  • Rent and rates 
  • Advertising

Income
This is the money earned by the business from its day to day operations.

Examples:

  • Rent received
  • Interest earned



Rules of Double Entry 

Expenses 
  1. Increase of Expenses - Debit 
  2. Decrease of Expenses - Credit 

Income 
  1. Increase of Income - Credit 
  2. Decrease of Income - Debit