Which term best describes the income earned by professionals who run their own practices, such as accountants or doctors, as a business activity?

• A. Self-Employed
• B. Business Income and Professional Income
• C. Gross Receipts
• D. Compensation income

Answer: (B)

The main idea here is how income is classified for individuals who earn money from their own professional practice. When a doctor, accountant, or other professional runs a private practice, their earnings come from providing services as part of a business activity, not from being paid as an employee. That makes their income fall under the category of business income and professional income, which covers money earned from self-employment in professional services.

This differs from compensation income, which is wages or salaries from employment; gross receipts, which is just the total money received (not the categorized income type); and self-employed, which is a status describing the person, not the specific income type. So the best fit is business income and professional income because it explicitly includes earnings from professional services conducted as a business.