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Indian Economy class 2 Concept of Income Explained UPSC

By : brainykey   April 24, 2019

Accounting income, often referred to as business income or conventional income is measured in accordance with generally accepted accounting principles. The profit and loss account or income statement determines the net income or operating performance of a business enterprise for some particular period of time. Hicks presented his concept of “well offness” as the basis for a rough approximation of personal income. According to Hicks, income is the maximum which can be consumed by a person in a defined period without impairing his “well offness” as it existed at the beginning of the period. In traditional accounting, the concept of accounting income has been recognised widely. Adequate attention has not been given to the capital maintenance concept associated with income measurement. In fact, ‘income measurement’ and ‘capital maintenance’ are interrelated or twin concepts.

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