Above The Line

Business, Legal & Accounting Glossary

Definition: Above The Line

Above The Line

Quick Summary of Above The Line

The “line” generally refers to gross profit. Above that line on the income statement, typically, are sales and COGS (cost of goods sold) or COS (cost of sales or cost of services). Below the line are operating expenses, interest, and taxes.

What is the dictionary definition of Above The Line?

Dictionary Definition

Denotes those entries printed above the horizontal line on a company’s profit and loss account that separates profit (and/or loss) from entries showing how said profit is distributed.


Full Definition of Above The Line

Prior to the introduction of Financial Report Standard 3, Reporting Financial Performance, in Oct. 1992, It was understood that any exceptional items that were within the ordinary activities of the business were shown “above the line”, whilst any extraordinary items outside of the ordinary activities of the business were shown below it (below the line).

There was, however, large criticism that the definitions of exceptional and extraordinary items may feasibly be manipulated to improve earning per share figures.

For example; if a property was sold at a large profit, it could have potentially been interpreted as a exceptional item and used to bolster the earnings per share; whereas if a property was sold at a loss; it could be listed as an extraordinary item; and thus listed below the line in such a way that was none detrimental to earning per share figures.

With the introduction of FRS 3, almost all items previously defined as extraordinary items were redefined as exceptional; Under current UK accounting practices, as detailed in the Financial Reporting Standard Applicable in the UK and Republic Of Ireland, all such items are shown above the line and included in the Earnings per share.


Synonyms For Above The Line

above average

Cite Term

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Page URL
Modern Language Association (MLA):
Above The Line. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
January 18, 2022 https://payrollheaven.com/define/above-the-line/.
Chicago Manual of Style (CMS):
Above The Line. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/above-the-line/ (accessed: January 18, 2022).
American Psychological Association (APA):
Above The Line. PayrollHeaven.com. Retrieved January 18, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/above-the-line/

Definition Sources

Definitions for Above The Line are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th January, 2020 | 41 Views.