Active Income

Posted in Finance, Accounting and Economics Terms, Total Reads: 1085

Definition: Active Income

Income earned by a person is considered to be mainly of 3 types.

i. Active income

ii. Passive income

iii. Portfolio income

Active income is that particular category of income which is earned by or paid as compensation to an individual as a result of activities/services rendered by him/her and in which resources are spent. Wages, salaries, tips and commissions are examples of active income.

This can be further understood by comparing the above examples with rent received by a person. This doesn’t involve any activity to be done by an individual and hence not considered to be active income.


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