Types of income
Income is the money that comes into a business. It is divided into two types, namely capital income, and revenue income.
Capital income
Loan
An amount of money a business receives and then pays back in instalments. Interest is payable.
Mortgage
A type of loan that is used to purchase a building or house. A mortgage is usually paid back over a period of 25-30 years.
Shares/Equity
Small proportions of a business that people own. Shareholders receive a dividend, which is a percentage of the company's profits, and have voting rights as of the owners of the company.
Owner's capital
The money the owner(s) invest in the business.
Debentures
A type of loan capital. Debenture holders are entitled to fixed returns on their investment but do not have voting rights.
Revenue income
This is the income that is received on a day-to-day basis. It includes:
Cash sales
Day-to-day sales paid for immediately. For example, when a customer pays for goods in a shop, this is an example of a cash sale.
Credit sales
Sales that are paid for later.
It can also include rent received (if a business rents out a building or site), commission received on sales, interest from money held at the bank or from other sources and discounts received.