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Random Research No.2

Random Research No.2

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"Random Research" means my writing is based on my random encounter with interesting concepts which are, from my personal point of view, worth sharing a word.
"Random Research" means my writing is based on my random encounter with interesting concepts which are, from my personal point of view, worth sharing a word.

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Categories:Types, Research
Published by: រ័ត្នវិសាល (Rathvisal) on Jun 20, 2012
Copyright:Attribution Non-commercial

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07/22/2012

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Random
 
Research
 
2
 
Page
 
1
 
of 
 
3
 
Random Research on various notionsNo. 2Note:
This writing is the mere product of my curiosity and will not constitute a formalopinion of any sort. Though, all/any comments are welcome.
Income - Profit - Revenue - Turnover: are they synonymous?
I am not a native speaker. However, I did encounter quite a few troubles, just trying tounderstand the concept for tax law translation purpose. So let us take a good look at how it isexplained by various native speakers. Here is one of them from the U.S.
1
:-
 
Revenue is the “top line” amount corresponding to the total benefits generated frombusiness activity. Income is the “bottom line” amount that results after deductingexpenses from revenue. In some countries, revenue is also referred to as “turnover.”This gives rise to an accounting equation:Revenues – Expenses = IncomeHere is another one from New Zealand
2
:-
 
 In
come is all the money that comes
in
. Also known as revenue or turnover; Profit iswhat is left over after we deduct
all
expenses from income; Example, ourrevenue/income/turnover is the money that the clients pay when we invoice them;And the profit (or loss) is what we have left after deducting electricity, salaries andother expenses;This gives rise to the same accounting equation, but expressed in a different manner:Revenues – Expenses = Profits
 
Implications:
1.
 
Now we understand that Revenues and Turnover are synonymous in both examples.2.
 
Income and Revenues are not synonyms in the 1
st
example.3.
 
Income and Revenues are synonyms in the 2
nd
example. And there is “Profits”.
Additional facts:
One of the 4 most significant financial statements is called:
 Income Statement 
. Some peoplealso call it: Profit and Loss Statement. We know that Loss is not a synonym of Income. So
1
 
Explanation
 
from
 
a
 
U.S.
 
website.
 
2
 
My
 
previous
 
colleague
 
was
 
from
 
New
 
Zealand.
 
 
Random
 
Research
 
2
 
Page
 
2
 
of 
 
3
 
there is no worry about the term “Loss”, at least not for now. But does that make “Profit” asynonym of “Income”?
Additional implications:
1.
 
It makes sense that Profit and Income are synonymous based on the 1
st
examplebecause they are the “bottom line” amount that results after deducting expenses fromrevenue.2.
 
But they cannot be synonyms for the 2
nd
example because
 In
come does not resultfrom the deduction.This means Income is a mysterious term for translation purpose. It can be either the “top line”amount in the 2
nd
example or the “bottom line” amount, in the 1
st
example. Let us go a littlebit deeper into the Income, as in
Gross Income
and
 Net Income
.
Gross Income vs. Net Income:
-
 
Gross Income: A company's revenue minus cost of goods sold. Also called "grossmargin" and "gross profit". The equation is thus:Revenues – Cost of goods sold = Gross income-
 
Net Income: Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. So Net Income is thebottom line.Example:
 
XYZ Co., Ltd.Income StatementFor the Year Ending December 31, 20x5
Sales $ 300,000Cost of goods sold $ 220,000Gross profit $ 80,000Operating expensesAdvertising $ 6,000Salaries $ 9,000Rent $ 5,000$ 20,000Net Income $ 60,000From this example, Sales / Revenues – Cost of goods sold = Gross Profit

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