Capital Income and Value: An Inseparable Triplets in a Business Organization
Oko Journal of Business Studies, Vol. 3, No. 1, November 2004
8 Pages Posted: 12 Apr 2011
Date Written: April 7, 2011
Abstract
According to Oxford Advanced Learners Dictionary (2001:148) "business means the activity of making, buying, selling or supplying goods or services for money". Therefore, any Institution or establishment that is involved in the process of production or buying or selling or supplying of goods or services or a combination of these may be referred to as a Business Organization. The central goal of such an organization is to exchange its output with money as a consideration. In order for the organization to get ready its output in goods or services form there is bound to be an investment in capital. It is this investment that is transformed into goods or services which is ultimately exchanged for a higher value.
The difference between the expenses and the revenue generated gives rise to income. Ordinarily, investors/shareholders are concerned with the worth of their investments in two senses. First, they are concerned with maintaining and increasing the value of their capital. Secondly, they are concerned with maintaining and increasing the income which is derived from the capital. Therefore, financial reporting is concerned with the valuation of investor's capital and income. Hence these three concepts capital, income and value suggest an inseparable triplet in any business organization. It is the expectation of this paper to analyse their relationship and highlight their impacts in a business organization.
Keywords: Capital, Income, Value, Business Organization
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