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Revenue (Sales) (Rev) Revenue is any money earned by the business. This information is based upon the rates published by the Federal Deposit Insurance Corporation. To be classified as a complex trust, it must do at least one of three activities within the year: The trust must retain some of its income and not distribute all of it to beneficiaries. Accounting Period Of course, there are those accounting terms that don’t pertain to a particular financial statement. For those, we’ve reserved the “general” category. According to A.H. Hansen “The consumption function shows what changes can be expected in the consumption from given change in income.” According to Dernburg and McDugall. The proportion of disposable income which individuals spend on consumption is known as propensity to consume. Other common bookkeeping terms. Interest expense: The interest paid on debt. It is calculated by taking Net Income and dividing it by Revenue for a given period. It suggests that national income, all of which is assumed to be paid out to households in the form of factor incomes (such as rents, wages, interest and dividends) is partly consumed (C) partly saved (S) and partly paid in taxes (T). Keynes’s Income-Expenditure Approach: It is worth noting here that the Keynesian theory is relevant in the context of the short run only since the stock of capital, techniques of production, efficiency of labour, the size of population, forms of business organisation have been assumed to remain constant in this theory. For example, if you are single, have taxable income of $50,000, and have a $25,000 long-term capital gain, it will be taxed at a 15% rate. Expenses: All money spent to operate the company that’s not directly related to the sale of individual goods or services. For determining national income, Keynes had divided the different sources of income into four sectors namely’ household sector, business sector, government sector, and foreign sector. The Determination of National Income: Keynes’s Basic Two Sector Model! Y = C + S + T … (3) This equation is basically an identity. Eric Bank has been covering business and financial topics since 1985, specializing in taking complex subject matters and explaining them in simple terms for consumer audiences. ... - This economics term refers to any tangible item that is produced and eventually consumed by the buyer; they are used when calculating GDP. This is the economic term that refers to one's total income that is left following the payment of all required taxes. A complex trust is essentially the opposite of a simple trust. Eric's writing regularly appears on Credible.com, eHow, WiseBread, The Nest, Get.com, Zacks, Chron, and dozens of other outlets. Some other common terms used in bookkeeping include the following: Accounting period: The time period for which financial information is being tracked. Wealth includes assets such as houses, cars, stocks, bonds, and savings accounts. Propensity to consume does not mean a mere desire to consume, but the actual consumption that takes place or is expected to take place out of varying amounts of income. 18. In economics, the marginal propensity to consume (MPC) is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending (consumption) occurs with an increase in disposable income (income after taxes and transfers). ADVERTISEMENTS: According to Keynes, there can be different sources of national income, such as government, foreign trade, individuals, businesses and trusts. The trust must distribute some or … 1 As of October 19th, 2020, national rates for Money Market and Interest Checking are calculated within an annual percentage yield. However, EBITDA is not an official number under the Generally Accepted Accounting Principles (GAAP), so it can be manipulated to suit management’s goals. General Terms. 19. 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