BBA III

SEM. V
CHAPTER 1.2

B Y YA S H I N S T I T U T E , N A N D E D.
( D R . A DV. M D. A H M E D M E M O N )

(INSTITUTE FOR MBA, MCA ENTRANCE &

BANKING EXAMS SINCE 2009)
SOURCES OF INCOME
• Salaries: a fixed sum of money, usually received every
month, for doing a particular job.
• Sales of products or services: making your own
money by selling products or services. It can also be
money received from selling handmade goods or
providing vocational services in your free time. This
can be a side income received in addition to your
main salary.
• Pensions: money received regularly, during years of
employment, to be saved for retirement.

By YASH Institute (Adv. Md. Ahmed Memon)

An Institute for MBA, MCA Entrance and
Banking Exams
SOURCES OF INCOME
• Profits from investments: for example, buying a
property; hoping its value increases over time giving
you profitable returns. Also, buying bonds or stocks
can help you gain money from their profits (to be
explained later in the coming courses).
• Gifts or Remittances: rewards or money received
without an effort. Usually, money received from family
working abroad to help in household expenses.

By YASH Institute (Adv. Md. Ahmed Memon)

An Institute for MBA, MCA Entrance and
Banking Exams
SOURCES OF INCOME
As per Income Tax Act
• Income from Salary
• Income from House Property
• Income from Profits and Gains of Profession or
Business
• Income from Capital Gains
• Income from Other Sources

By YASH Institute (Adv. Md. Ahmed Memon)

An Institute for MBA, MCA Entrance and
Banking Exams
PROFESSIONAL INCOME
• Profession means exploitation of ones skills and
knowledge independently.
• Profession includes vocation.
• Professional Income is income from exercise of any
profession or vocation which calls for an intellectual
or manual skill.
• It covers doctor, lawyers, accountants, consulting
engineers, artists, musicians, singers etc.

By YASH Institute (Adv. Md. Ahmed Memon)

An Institute for MBA, MCA Entrance and
Banking Exams
INVESTMENT INCOME
• Investment income is income that comes from
interest payments, dividends, capital gains collected
upon the sale of a security or other assets, and any
other profit made through an investment vehicle.
• Generally, individuals earn most of their total net
income each year through regular employment
income.
• However, disciplined saving and investment in the
financial markets can grow moderate savings into
large investment portfolios, yielding an investor a large
annual investment income over time.
By YASH Institute (Adv. Md. Ahmed Memon)
An Institute for MBA, MCA Entrance and
Banking Exams
INVESTMENT INCOME
• Interest earned on bank accounts, dividends received
from stock owned by mutual fund holdings, or sales of
gold coins held in a safety deposit box are all
considered investment income.
• Often, income made on investments undergoes
different—and sometimes preferential—tax
treatment, which varies by country and locality.

By YASH Institute (Adv. Md. Ahmed Memon)

An Institute for MBA, MCA Entrance and
Banking Exams
ACTIVE AND PASSIVE INCOME
• Active income refers to income received from
performing a service and includes wages, tips, salaries,
commissions, and income from businesses in which
there is material participation
• Passive income is earnings derived from a rental
property, limited partnership, or other enterprise in
which a person is not actively involved.

By YASH Institute (Adv. Md. Ahmed Memon)

An Institute for MBA, MCA Entrance and
Banking Exams
REGULAR AND LUMP SUM EXPENSES
• Regular expenses occur on a regular basis. For
example, you are charged rent or a mortgage every
month.
• You anticipate these expenses and can plan for them
• A lump-sum Expense is often large sum that is paid in
one single payment instead of broken up into
installments.
• These are normally unplanned, irregular, sudden and
non repetitive in nature

By YASH Institute (Adv. Md. Ahmed Memon)

An Institute for MBA, MCA Entrance and
Banking Exams
DISCRETIONARY & NON DISCRETIONARY EXPENSES
• Non-discretionary expenses are considered mandatory—
housing, taxes, debt, groceries etc.
• Discretionary expenses are any costs incurred above and
beyond what is deemed necessary.
• The term discretionary expense refers to a cost that a
business or household can get by without, if necessary.
• Discretionary expenses are often defined as nonessential
spending or, in other words, wants rather than needs.
• This means a business or household is still able to run
even if all discretionary consumer spending stops.
• Meals at restaurants and entertainment costs are
examples of discretionary expenses.
By YASH Institute (Adv. Md. Ahmed Memon)
An Institute for MBA, MCA Entrance and
Banking Exams
DEFICIT VS SURPLUS
• A deficit is an amount by which a resource, especially
money, falls short of what is required.
• A deficit occurs when expenses exceed revenues,
imports exceed exports, or liabilities exceed assets.
• A deficit is synonymous with shortfall or loss and is
the opposite of a surplus.
• In a deficit, the total of negative amounts is greater
than the total of positive amounts.
• In other words, the outflow of money exceeds the
inflow of funds.
• A deficit can occur when a government, company, or
individual spends more than is received in a given
period, usually a year.ByAnYASH Institute (Adv. Md. Ahmed Memon)
Institute for MBA, MCA Entrance and
Banking Exams
SAVING AND INVESTING
• Saving is setting aside money you don’t spend now
for emergencies or for a future purchase.
• It’s money you want to be able to access quickly, with
little or no risk, and with the least amount of taxes.
Financial institutions offer a number of different
savings options.
• Investing is buying assets such as stocks, bonds,
mutual funds or real estate with the expectation that
your investment will make money for you.
• Investments usually are selected to achieve long-term
goals.
• Generally speaking, investments can be categorized as
income investments or growth investments.
By YASH Institute (Adv. Md. Ahmed Memon)
An Institute for MBA, MCA Entrance and
Banking Exams