Earned Income

Revenue generated from providing goods or services, representing compensation for work performed or products delivered. Earned income differs from passive income (like investments) or unearned income (like prepaid services) by directly connecting to current period productive activities.

For example, a consulting firm earns $200,000 by completing a strategic analysis project for a client. This income represents compensation for professional services actually delivered, unlike interest income from investments or advance payments for future work. The timing of earning matches the delivery of service.

Managing earned income involves proper revenue recognition, performance measurement, and cash flow planning. Organizations must track service delivery, billing cycles, and collection efforts.