Above-the-line entries refer to those listed above the horizontal line on a company's profit and loss account, reflecting normal business activities. This accounting practice is critical for understanding how a company's earnings are generated.
Earnings, also referred to as net income or profit, is a crucial metric in financial reporting which forms the basis for calculating earnings per share. A key aspect of corporate finance, earnings definition and reporting have evolved to curb creative accounting and ensure transparency.
Costs or income that affect a company's profit and loss account and need special disclosure due to their unusual size or incidence, despite falling within ordinary activities.
Extraordinary items are costs or income that affect a company's profit and loss account but do not derive from the ordinary activities of the company. These items are unusual, infrequent, and not expected to recur.
