MEANING OF INCOME

income is the sum of all the wages, salaries, profits, interests

payments, rents and other forms of earnings received in a given
period of time
While receiving some of these incomes, one has to give
something in return.
However there are some money incomes for which one has not to
give anything in return; examples are donations and gifts
two types of incomes: 1) Factor incomes and 2) non-factor
incomes.
 Factor incomes

Factor income is income derived from selling the services of factors of

production.(inputs to the production process)
In the case of labour, this means wages, plus the part of the incomes of
the self-employed which is a reward for their own labour. Income from
land is rents.
Incomes from capital and entrepreneurship are received as dividends,
interest, the retained profits of companies and the part of the incomes
of the self-employed which is a return on their own capital and
entrepreneurship..
 Non-factor incomes

also known as transfer incomes .

merely represent transfer of money without any goods or services
being provided in return.
Example: donations and gifts.
 It is the joint effort of the four factors of production i.e. land,
labour, capital and entrepreneur which is required to produce a
good or a service.