The definition of financial income is the amounts coming exclusively from the financial management of the company in respect of interest on loans granted, the performance of the securities portfolio, income obtained from shares in the capital of other companies and discounts on acquisitions by I'll pay soon. In general, this section includes financial investments made to place a cash surplus.
Financial income in the PGC
Depending on the source of income, the General accounting plan determine several accounts where to reflect them, such as for example:
- Income from fixed income securities.
- Income from shares from participation in the capital of another company.
- Credit income from interests of the loans granted by the company.
- Another financial income.
The concept of financial income, therefore, refers to returns in the form of capital gains, dividends and interest generated by financial investments or by Bank deposits in current accounts, such as income from equity participation or interest on loans.
In application of the accrual principle, financial income is recorded once accrued, regardless of when it is collected. For example, if a company makes a loan of 100.000 euros on December 1, 2016, for twelve months, with payment of interest at the end of the operation, it will have to register in the year 2000 the interest on the credit belonging to the month of December , regardless of the fact that the payment will not be made until November 30, 2017.