In Accounting Services in Jersey City, income and expenses are the "action" items that determine a company's success. While income represents the value flowing into the business, expenses represent the costs required to generate that value.
Below are common examples categorized by how they appear on financial statements.
1. Examples of Income (Revenue)
Income is not just limited to sales. It is often split into two categories based on how the money was earned:
Operating Income
This is money earned from the core business activities.
Product Sales: Revenue from selling physical goods (e.g., a laptop, a loaf of bread, or a car).
Service Fees: Revenue from providing a service (e.g., consulting hours, a haircut, or a plumbing repair).
Subscription Fees: Monthly or annual recurring revenue (e.g., Netflix, a gym membership, or SaaS software).
Non-Operating Income
This is money earned from activities outside the main business mission.
Interest Income: Money earned from business savings accounts or bonds.
Dividend Income: Payments received from owning shares in other companies.
Asset Sale Gains: Profit made from selling a company asset (like an old delivery truck) for more than its book value.
2. Examples of Expenses
Expenses are typically grouped by their "function" or their "behavior."
Common Operating Expenses (OpEx)
These are the daily costs required to keep the business running.
Payroll: Salaries, wages, and bonuses for employees.
Rent/Lease: Monthly payments for office space, retail stores, or warehouses.
Utilities: Electricity, water, internet, and phone services.
Marketing: Costs for social media ads, billboards, or email campaigns.
Insurance: Premiums for general liability, property, or workers' compensation insurance.
Depreciation: A non-cash expense representing the wear and tear on equipment over time.
Cost of Goods Sold (COGS)
These are "direct" expenses tied specifically to the production of a product.
Raw Materials: Fabric for a clothing brand or wood for a furniture maker.
Direct Labor: Wages for the people on the assembly line or the chefs in a kitchen.
Packaging: Boxes, labels, and shipping containers.
Non-Operating Expenses
Incidental costs not related to core operations.
Interest Expense: The cost of borrowing money (interest on bank loans).
Lawsuit Settlements: One-time legal costs or fines.
Loss on Sale of Assets: When an asset is sold for Accounting Services Jersey City its recorded value.