Journal of Management and Economics
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TYPE
Original Research
PAGE NO.
18-21
OPEN ACCESS
SUBMITED
24 December 2024
ACCEPTED
26 January 2025
PUBLISHED
28 February 2025
VOLUME
Vol.05 Issue02 2025
COPYRIGHT
© 2025 Original content from this work may be used under the terms
of the creative commons attributes 4.0 License.
The Economic Essence of
The Company's Income
and Expenses
Mukhibova Guli Yarkinovna
Associate Professor of the Department of Economics and Real Estate,
Tashkent University of Architecture and Civil Engineering, Uzbekistan
Abstract:
The article examines the theoretical aspects of
the analysis of income and expenses of an enterprise,
the economic essence of income and expenses of an
enterprise, methods and problems of income and
expense analysis, their composition, structure and
dynamics, and highlights some of the influences of
factors. Economically justified ways of increasing
incomes and reducing expenses are proposed, the
theoretical aspects of the economic categories
"income" and "expenses" are investigated.
Keywords:
Enterprise income, enterprise expenses,
profit, vector, hyperbole.
Introduction:
Regardless of the business profile of an
enterprise, its income and expenses are always
generated in the course of its activities. It is these
aspects of activity that are most important for all
stakeholders
–
the owners of the enterprise, employees,
and the state, since their successful formation and
proper planning allow all participants in production
activities to ultimately, achieve your financial goals
–
first of all, to increase their well-being and quality of life,
and to make a profit. In the absence of government
plans "imposed from above", the implementation of
which was the main goal of enterprises operating in a
centrally planned economy, the main guideline for
business entities in a modern market economy is the
planning by enterprises themselves of their income and
expenses and control over them, which is achieved
through analysis and accounting. Proper accounting and
analysis of income and expenses is important to reflect
the activities of construction companies. The income
and expenses of an enterprise affect the financial result
of an enterprise in construction enterprises, while the
goal of any enterprise is to make a profit.
Despite the diverse consideration of the actual
problems of accounting for income and expenses of
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Journal of Management and Economics
construction enterprises, the issues of its improvement
are beyond doubt, however, there are differences in
the methodological and methodological approaches of
researchers to their definition: the concept of
"income" with the concept of "revenue", and the
concept of "costs" with the concept
of "expences". [1] Income is defined as revenue, which
includes the following components (Figure 1).
Costs are everything that a manufacturer purchases to
use in order to achieve the desired result. In general,
profit is defined as the difference between total
revenue and total costs:
𝑇𝑅
—
𝑇𝐶
=
𝜋
, (1.1)
𝑇𝑅
—
total revenue (income),
𝑇𝐶
—
total cost,
π
—
profit.
External costs include payments to external suppliers.
By subtracting external costs from the total revenue
(income),
they
receive
accounting
profit.[2]
Accounting profit does not take into account internal
(or hidden) costs.
The internal costs are:
1)
the cost of resources owned by the
entrepreneur himself
2)
normal profit, which is accounted for by such
an important resource as entrepreneurial ability.
By subtracting internal costs from accounting profits,
they make an economic profit.[3] Thus, unlike
accounting profit, which takes into account only
external costs, economic profit is determined by
subtracting both external and internal costs (including
normal profit) from revenue. The external and internal
costs add up to economic or alternative costs. This
means that when determining the amount of real
profit, one should proceed from the price of a resource
that its owner would receive if it were used in the best
possible way.[4]
Economic costs make it possible to understand the
difference between the approaches of an accountant
and an economist to assessing the company's activities.
The accountant is primarily interested in the results of
the company's activities for a certain (accounting)
period. He analyzes the past and the existing experience
in the company's activities. An economist, on the
contrary, is interested in the company's business
prospects and its future. That is why he keeps a close
eye on the price of the best alternative to using the
resources he has at his disposal.[5] For a detailed
analysis of economic activity, the concept of total,
average and marginal income (revenue) is introduced.
Total income is the amount of income earned by a
company from the sale of a certain amount of goods:
𝑇𝑅
=
𝑃
×
𝑄
, (1.2)
𝑃
—
price,
𝑄
–
quantity of goods.
A large number of geometric and physical quantities are
fully determined if their numerical characteristics are
specified. These values will be the length of the line,
div volume (mathematical quantities), weight, work,
temperature (physical quantities), cost of goods or
services, staff salaries, credits, income (economic
quantities), etc. In mathematics, such quantities are
called scalar quantities or simply scalars.
On the other hand, it is not uncommon to find a value
that is a little more complex in its form, which often
cannot be fully characterized by its own numerical
value. Such measurement quantities include such
quantities as: vector (in mathematics), velocity,
acceleration, force (in physics) and others. In order to
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Journal of Management and Economics
show the full characteristics of the listed quantities,
you need to specify their numerical characteristics and
direction. [6] These quantities are called vector
quantities or simply vectors. Vectors are one of the
simplest, most understandable, and most convenient
ways to describe processes, including those related to
economics.
In accounting, the concept of "income" and "expenses"
is most fully disclosed in the Accounting Regulations
"Income of the organization" and the Accounting
Regulations "Expenses of the organization". Depending
on the nature, conditions of receipt and areas of
activity of the organization, all the income of the
organization is divided into income from ordinary
activities and other income. Income that is not related
to income from ordinary activities is other income.
Organizations have the right to independently classify
certain types of income as income from ordinary
activities or other income, depending on the nature of
the organization's activities, the type of income and
the conditions for their receipt In the organization's
accounting statements, in particular in the income
statement, the income of the organization received
during the reporting period should be reflected with
the revenue division and other income. The concept
"sales revenue" corresponds to the concept of "income
from ordinary activities". In practice, the specialists of
the Ministry of Economics and Finance of the Republic
of Uzbekistan do not use this concept for accounting
purposes, it is used only by independent consultants.
Income from ordinary activities is revenue from the
sale of products and goods, income related to the
performance of work, provision of services
(hereinafter referred to as revenue). Depending on the
type of activity an organization's revenue is considered
to be: - the amount of rent received if the object of the
organization's activity is to provide for a fee for
temporary use (temporary possession and use) of its
assets under a lease agreement; - the amount of
royalties received (including royalties) for the use of
intellectual property objects if the object of the
organization's activity is to grant for a fee rights arising
from patents for inventions, industrial designs and
other types of intellectual property; - the amounts of
income related to participation in the authorized
capitals of other organizations, if the subject of the
organization's activity is participation in the authorized
capitals of other organizations. The conditions under
which revenue is recognized in the organization's
accounting records. Let's list these conditions:
1) the organization has the right to receive this
revenue, arising from a specific contract or otherwise
confirmed accordingly;
2) the amount of revenue can be determined;
3) there is confidence that a particular operation will
result in an increase in the economic benefits of the
organization. There is confidence that a particular
transaction will result in an increase in the economic
benefits of the organization when the organization has
received an asset as payment or there is no uncertainty
about receiving the asset.;
4) the right of ownership (possession, use and disposal)
of the products (goods) has passed from the
organization to the buyer or the work has been
accepted by the customer (the service has been
rendered);
5) the expenses that are incurred or will be incurred in
connection with this operation can be determined.
For revenue to be recognized in accounting, all five
conditions must be met simultaneously. In accordance
with National Accounting Standard No. 2 "Income from
core activities" (Registered by the Ministry of Justice of
the Republic of Uzbekistan on August 26, 1998,
Registration No.483), income from other legal entities
and individuals is not recognized as income of an
organization:
-
amounts of value added tax (hereinafter
referred to as VAT), excise taxes, export duties and
other similar mandatory payments;
-
under commission agreements, agency and
other similar agreements in favor of the committee,
principal and the like;
-
in the order of advance payment for products,
goods, works, services, as well as the amount of advance
payments for products, goods, works, services;
-
as collateral, if the contract provides for the
transfer of the pledged property to the mortgagee;
- in repayment of a loan, a loan provided to the
borrower. [7]
Expenses of an enterprise are recognized as a decrease
in economic benefits as a result of the disposal of assets
and (or) the occurrence of liabilities, leading to a
decrease in the capital of the enterprise.
Depending on the nature, conditions of implementation
and the direction of the organization's activities, all
expenses are divided into expenses for ordinary
activities and other expenses.
Thus, expenses other than expenses related to ordinary
activities represent other expenses of the organization.
So, when studying the activity of an enterprise, second-
order curves can be used as a mathematical model of
this enterprise. This allows entrepreneurs to switch to
the production of new types of goods at no special cost.
Economically justified ways of increasing incomes and
reducing expenses are proposed, the theoretical
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Journal of Management and Economics
aspects of the economic categories "income" and
"expenses" are investigated.
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