The financial income is that income from the efforts in financial operations.
So financial income constitutes an amount of income in favour of a certain activity derived from the investment of financial capital. Naturally, the flow and amount of this income depend on good financial management. For companies, this is a very important issue. Since the direction that the company may have is based on obtaining and uses of the capital resource.
Financial income constitutes the opposite pole to income denominated as non-financial income. Non-financial income comes to be in the company all those income from activities that are usually the company’s own activities. With the exception of financial companies such as banks or insurers.
Sources of financial income
The financial income comes from the use of cash and assets with certain degrees of liquidity. Among the sources of these revenues are the following:
- Interests of loans granted by the company.
- Inversions in actions.
- Bond holding.
- Fixed income securities.
- Discounts on purchases for prompt payment.
- Currency holding.
In short, these revenues become resources that the company receives as a result of its financial operations. Therefore, the income is the result of several financial activities that the company carries out over a certain period of time.
Types of financial income accounts
The Financial income is recorded in respectively in different accounts.
Accounts like the following:
- Income from equity participation.
- Credit Income
- Income from income values.
- Benefits from securities.
- Positive differences in currency exchange.
- Another financial income.
How we see the accounting can use several names or terminate us to reflect the record of the company’s financial income.
It should be noted that the financial Accounting considers that these revenues must be accounted for at the time they are earned and not when they are collected.
This means, for example, that in the credit income account. Assume that the company has granted a loan for X value as of May 30 of the current year, charging interest at the end of six months.
Taking into account the accounting guidelines, the company will have to register the interest earned on May 30 and not at the end of the six month period when the payment will be made.