Interest Income. Under this title is recorded the income from money loaned or credit extended. Notes receivable and bonds are the usual sources. Sometimes open accounts receivable also bring interest.
Rental Income. Under this title is recorded income received from the lease of premises, lands, or buildings.
Professional Fees. Under this title is recorded the income from charges made for professional services.
Commissions Earned. Included under this title is the income received from services rendered in the selling of commodities for a principal.
Purchase Discount. This represents the deduction allowed from the original charge for paying a debt in advance of the date named in the purchase contract.
Expenses.—Expenses are also of two types: operating and non-operating. The same distinction is made here as with income. Those expenses incurred in securing operating income are operating expenses, while those incurred in securing non-operating income or for other purposes are called non-operating expenses.
To secure control over the operating and non-operating types of activities, it is necessary to compare operating income with operating expenses, and non-operating income with non-operating expenses, in order to measure the return by the effort expended in securing that return. Some of the more common titles under which the record of expenses is made are as follows:
Salaries (Wages). Under this title is included the cost of the services rendered by employees. This may be classified in accordance with the department in which the service is rendered; for example, factory wages, salesmen’s salaries, office salaries, and so forth.
Traveling Expenses. The costs of railroad fare, entertainment, and so forth, when traveling in the interests of the business.
Advertising. The cost of publicity in making known the commodities offered for sale by the business.