Category: 

What Is a Financial Revenue?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 August 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
  • Print this Article

A financial revenue is income that is generated due to the ownership of some sort of asset, such as stocks, bonds, or even real estate. The range of income types that are normally classed as financial revenue range from interest earned from ownership of bond issues, dividends that are received on shares of stock, and even the rent income that is generated from renting or leasing property to a tenant. The defining aspect of this type of revenue is that the money is received as a condition of owning some sort of asset.

References to financial revenue are most often associated with the accounting process. When posting this type of income as line items in accounting records, identification of the income as financial revenue is part of the process of tracking which resources are generating some sort of return, versus those that are not. In addition, this classification also aids in segregating the revenue from other income sources, such as the sale of goods and services. Doing so can make it easier for a company that is posting profits to identify how much of growth in income is coming from sales and how much is due to the investment and other activities of the business.

Ad

Individuals may also track financial revenue as a means of identifying how their personal wealth is expanding. For example, if the individual owns a second home that he or she rents out, and also has some shares of stock that earn quarterly dividends, identifying those types of income streams as financial revenue makes it easier to keep those amounts separate from any wages or salaries that are also part of that total income. This is helpful not only in terms of knowing how much income is being generated by different means, but also makes the task of calculating taxes on the various types of income much easier.

Since tax laws vary from one country to the next, it is important to determine that the tax agency is classified as a financial revenue. Doing so will make the task of identifying what type of tax obligation is connected with each of those assets and calculating the amount of taxes properly easier. In addition to receiving information from the tax agency in regard to what tax table to use for a given financial revenue, accountants and other financial professionals who offer tax return preparation services can also provide current information on how to determine the right amount of tax on each type of earned income.

Ad

Recommended

Discuss this Article

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email