Income
What is income?
Income is what the business earns, mostly from sales.
In the books an income account goes up on the credit side.
A sale on credit is recorded when it is made, not when the money arrives.
Example
A bakery sells bread for £180.00 and the money goes into the bank. Bank is debited with £180.00 and Sales is credited with £180.00.
Why it matters
The statement of profit or loss sets income against expenses to find the profit. Money the owner pays in is capital, not income.
Practise it
Practise it nowDebit and credit
Ledger Drill is practice, not tax or accounting advice. If this looks wrong, tell us at [email protected].