Comprehensive income

Definition

Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. It captures both net income and other comprehensive income (OCI) items.

5 Must Know Facts For Your Next Test

1. Comprehensive income encompasses both net income and other comprehensive income (OCI).
2. Other comprehensive income (OCI) includes items like unrealized gains/losses on available-for-sale securities, foreign currency translation adjustments, and pension plan gains/losses.
3. The statement of comprehensive income can be presented either in a single continuous statement or in two separate but consecutive statements.
4. Comprehensive income provides a more complete picture of a company's financial performance than net income alone.
5. Items included in OCI are typically excluded from the calculation of earnings per share (EPS).

Review Questions

• What components make up comprehensive income?
• Why is comprehensive income considered more complete than net income?
• How can a company present its comprehensive income on financial statements?

Related terms

Net Income:

Net Income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue.

Other Comprehensive Income (OCI): Other Comprehensive Income includes revenues, expenses, gains, and losses that have yet to be realized.

Statement of Owner's Equity:

This financial statement shows changes in the owner's equity over an accounting period.