Difference Between Income and Wealth

 

It is the fundamental requirement of an individual, household or business to finance routine expenses. Economic wealth can be divided into two categories, i.e. While income is generated, wealth is created, there is a big difference between two. It is the sum of all tangible and intangible assets, an entity possesses, that can be exchanged for money including savings, investments, real estate, cash and other valuable items less all liabilities.

GDP (Gross Domestic Product) is the most common measure to find out the wealth of the country while the wealth of individual can be determined through their Net Worth

In economics, the term ‘wealth’ refers to the aggregate of all assets of a firm, household, government, etc. So, if you are also confused between these two terms, take a look at the article provided below to have a clear understanding of these two terms.

Content: Income Vs Wealth

Comparison Chart

Definition

Key Differences

Conclusion

Comparison Chart

BASIS FOR COMPARISON INCOME WEALTH

Meaning Income refers to the money received or earned on a continuous basis, as a return for work or investments. Wealth implies money or valuable possession accumulated by a person during the course of his life.

What is it? Flow of money Stock of assets

Acquisition Income is generated immediately. Wealth is created over time.

Tax levied Income tax Wealt

Definition of Income

We define income as the monetary return that accrue/arise or is expected to accrue/arise at fixed intervals from certain sources. As against this, wealth tax is levied on an individual or household’s wealth.

Therefore, income is something that a person gets in return for the work performed or money invested by him. , that generates income or is capable of generating income in future. the creation of wealth takes time.

Income tax is charged on the income of an individual from various sources i.e. monetary wealth and non-monetary wealth.

Key Differences Between Income and Wealth

The differences between income and wealth can be drawn clearly on the following grounds:

The amount of money received on a periodic basis, in exchange for the products or services provided or the capital invested is called income. Income is the only source that can help in the creation of wealth, so it can be said that income yields wealth

. Wealth can be defined as the assets or property which are held by a person during his course of life.

Income is the flow of money, obtained from factors of production. It is an amount of money, which a person gets, receives or earns, either through investing capital or through providing goods or services. Many think that these two terms are one and the same thing, but in reality, income is a stream of money, which a person receives from different sources such as salary, rent, profit, interest etc., that helps in the creation of wealth and wealth is the total market value of all the assets possessed, stored or saved by a person for future use.

former is the money earned by a person, over a limited period say one week or one month, whereas the latter is the money earned by a person during his lifetime. It takes into account human capital and natural resources, rather than money and securities. On the other hand, wealth is the market price of the stock of asset possessed by an individual or household.

Income is earned or received, during a limited period. On the other hand, the wealth of a person is something that helps him/her to survive for some days without working. Moreover, while the calculation of taxes, income covers only revenue receipts and includes those incomes also which do not arise on a regular basis, such as winning from lotteries, horse races or crossword puzzles.

Definition of Wealth

Wealth denotes the current market value of total assets owned by an individual, society, company and country. Conversely, wealth is accumulated over time, i.e. The sources of income can be:

Wages and salary from employment.

Rental income from house property.

Interest on savings and securities.

Dividend income.

Income from business or profession.

In accounting terminology, income is net of revenue, i.e. revenue less all expenses and taxes. salary, house property, capital gains, business/profession and other sources.

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