Difference Between Direct And Indirect Income
A Direct Income or Revenue is related to t he mai n source of revenue of t h e b usi ness as t h e b usi ness totally depends upon suc h mai n source to exist, to operate and to earn Profits or Income from profita b le activities for t he period. For example, if a n automo b ile compa ny sells cars w h ic h is its main purpose to sell and earn profits, t he n t he mai n source of revenue for suc h auto compa ny is Selling of Cars. Usually, t h e main source of revenue for any kind of b usi ness is a Sales i.e., goods sold or services rendered to customers against a payment. Direct income is recorded in Income Statement or Trading And Profit And Loss Account. It is a Temporary Account so it is closed to Income Statement at t he e nd of t he accou nting period. Indirect Income or Revenue has no concern wit h the mai n source of revenue of t he b usi ness rat her tha n it is earned t hrough other sources. As we see i n our ab ove example for a n auto compa ny w ...