{"id":"concept:income-account","kind":"concept","label":"Income Account","synonyms":["revenue account"],"definition":"An income account records money earned, such as sales, service revenue, or interest, and it carries a normal credit balance that grows as revenue comes in.","summary":"Sales, Service Revenue, Other Income — all credit-normal, all growing as money is earned. A loan or an owner's contribution is never recorded here, even though both can look like income arriving in the bank; neither is money actually earned.","explanation":["An income account records money genuinely earned — a sale, a completed job, interest credited by a bank. It's one of the five account types, credit-normal like liability and equity, so it grows with a credit and shrinks with a debit. Every income account appears on the profit and loss statement, which totals them alongside expenses to arrive at net income.","Not everything that arrives in a bank account is income, and getting this distinction right matters for an accurate P&L. A business loan increases cash immediately but is never income — it's a liability, since it has to be repaid. An owner's personal contribution likewise increases cash without being income — it's equity, money the owner is putting in, not money the business earned.","BalanceMCP's starter charts include Uncategorized Income specifically for money that arrived but hasn't been sorted into a real income account yet. It behaves exactly like Sales or Service Revenue on reports while it sits there, which is precisely why it's meant to be temporary — a shrinking balance means categorization is keeping up; a growing one means it's falling behind.","Deciding which specific income account a deposit belongs to is a genuine categorization judgment, the same as any expense decision — a sale is Sales or Service Revenue depending on the business, while a one-off gain, a rebate, or interest earned typically belongs in Other Income instead, since it isn't the business's core, repeatable source of revenue."],"commonMistakes":["Recording a loan or an owner's contribution as income — neither is money earned, even though both can increase cash the same way a sale does.","Letting Uncategorized Income sit unresolved instead of reclassifying it to a real income account once its source is known.","Recording a one-off gain or rebate in a core revenue account instead of Other Income, which distorts what the business's real, repeatable revenue looks like."],"category":"accounts","questions":[{"question":"Is a business loan recorded as income?","answer":"No, never — it increases cash and a liability by the same amount. It's debt, not earnings, even though it arrives in the bank the same way a sale would."},{"question":"What's the difference between Sales and Other Income?","answer":"Sales (or Service Revenue) is the business's core, repeatable source of revenue. Other Income is for smaller, incidental amounts — interest earned, a rebate, a one-off gain — that aren't the main way the business earns money."}],"url":"/glossary/income-account","relatedTo":[{"id":"concept:normal-balance","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Anormal-balance"},{"id":"concept:revenue-recognition","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Arevenue-recognition"},{"id":"concept:profit-and-loss","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aprofit-and-loss"},{"id":"concept:expense-account","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aexpense-account"},{"id":"concept:owners-contribution","relationship":"related","weight":0.9,"api":"/api/knowledge/concept%3Aowners-contribution"},{"id":"account:4000-sales","relationship":"references","weight":0.7,"api":"/api/knowledge/account%3A4000-sales"},{"id":"account:4999-uncategorized-income","relationship":"references","weight":0.7,"api":"/api/knowledge/account%3A4999-uncategorized-income"}],"referencedBy":[{"id":"concept:credit","label":"Credit","url":"/glossary/credit"},{"id":"concept:chart-of-accounts","label":"Chart of Accounts","url":"/glossary/chart-of-accounts"},{"id":"concept:account","label":"Account","url":"/glossary/account"},{"id":"concept:normal-balance","label":"Normal Balance","url":"/glossary/normal-balance"},{"id":"concept:revenue-recognition","label":"Revenue Recognition","url":"/glossary/revenue-recognition"},{"id":"concept:expense-account","label":"Expense Account","url":"/glossary/expense-account"},{"id":"concept:owners-contribution","label":"Owner's Contribution","url":"/glossary/owners-contribution"}],"license":"https://creativecommons.org/licenses/by/4.0/","attribution":"BalanceMCP — https://balancemcp.com"}