Explain direct income vs indirect income with examples?

Answer:

Direct income

Direct income is one that is received directly from business operations.

You probably have a manager, staff, and suppliers if you own a coffee shop. Direct income is the profit you make directly from the selling of coffee, snacks, and other drinks in such a shop. As a result, direct income can be described as a business’s active income.

Examples:

  • Professionals
  • Salaried employee
  • Income from business services
  • Income from selling products

Indirect income

One that is gained from non-business activities is indirect income. Sales of old newspapers, sales of cardboard boxes for instance, etc.

Newspapers, old cutlery, bottles and cans, and other items are likely to be found in the same coffee shop. You may either hold them or throw them away. Of course, a businessperson would not throw them away. Instead, he’ll measure their worth before listing them for sale. Indirect income is the type of revenue produced in this manner.

Examples

  • Fixed asset selling
  • Sale of old bottles
  • Sale of old newspapers

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