Final answer:
Income is a broader term that includes all kinds of gains, while revenue refers to the earnings from primary business activities. These distinctions by AASB/IASB aid in clear financial reporting, and understanding these as well as explicit and implicit costs helps businesses to determine their true profitability.
Step-by-step explanation:
The key distinctions between 'income' and 'revenue' are important terms in the field of accounting and business. Income is a broader concept that encompasses not only the sales revenue but also other forms of gains and earnings that a business receives during a period. This can include interest, dividends, and gains on asset sales. In contrast, revenue usually refers to the money received from a company's core business operations, such as the sale of goods or services before any expenses are deducted.
The AASB/IASB made these distinctions to provide clarity and precision in financial reporting. Furthermore, understanding the difference between explicit and implicit costs is crucial for businesses to determine accounting profit and economic profit. Accounting profit is the straightforward calculation of total revenue minus explicit costs whereas economic profit also takes into account implicit costs, offering a true measure of a business's profitability and economic performance.
Given the relationship between cost and revenue, and the impact of taxes on both individuals and businesses, it's critical to assess the economic implications. Taxes can shift consumer behaviour and influence the economic activities of businesses, altering resource allocation and affecting overall growth and productivity.