Sustainable income
As opposed to the traditionally upheld view that sustainable development and optimal growth refer to similar concepts, the concept of sustainable development is just one of the significant articulations under ‘Optimal Growth.’ It is fundamental to have an in-depth understanding of the concept of sustainable income and its essentiality in evaluating income statement.
Sustainable income refers to the amount of earnings that are required by a household or organization to cater for the initial costs at a later date (Tukker & Tischner, 2017). As such, the concept of sustainable income is the amount of earnings that is needed by either a company or household to enable it to maintain a sensible way of life while at the same time making source alternatives for future purposes. Precisely, the concept reflects on the amount of income which a household or organization requires to comfortably cater for all of its necessary expenses in the near or far future.
The concept of sustainable income is basic when evaluating an income statement. The aspect of multi-income is an essential consideration in accounting. Analysis of sustainable income facilitates the determination of the reasons leading to the Multi-step income statement. Extraordinary items and discontinued operations are among the items that may impact sustainable income. Extraordinary items occur in a situation where there is an abnormal occurrence in the organization’s income statement. It is stated as income separated from the company’s continued operations.
In summary, sustainable income is a concept referring to the amount of money that is enough to enable a household or company to cater for the current and future necessary expenses without constraints. Ideas on sustainable income facilitate the determination of the factors leading to the multi-step income statement. Integration of extraordinary items and adoption of operations that are not continuous forms the two with implication to the sustainable income of an organization.
References
Tukker, A., & Tischner, U. (Eds.). (2017). New business for old Europe: product-service development, competitiveness, and sustainability. Routledge.