How is comprehensive income different than net income?
DEFINITION of 'Comprehensive Income'
The change in a company's net assets from nonowner sources over a specified period of time. Comprehensive income is a statement of all income and expenses recognized during that period. The statement includes revenue, finance costs, tax expenses, discontinued operations, profit share and profit/loss.
INVESTOPEDIA EXPLAINS 'Comprehensive Income'
Companies typically report comprehensive income in a separate statement from income resulting from owner changes in equity, but have the option of providing information in a single statement. Many firms shy away from the single statement approach because it mixes owner and nonowner activity, which can muddle the underlying information.
DEFINITION of 'Net Income - NI' …show more content…
An individual's income after deductions, credits and taxes are factored into gross income. Deductions and credits are subtracted from gross income to arrive at taxable income, which is used to calculate income tax. Net income is income tax subtracted from taxable income.
INVESTOPEDIA EXPLAINS 'Net Income - NI'
1. Net income is calculated by starting with a company's total revenue. From this, the cost of sales, along with any other expenses that the company incurred during the period, is removed to reach earnings before tax. Tax is deducted from this amount to reach the net income number. Net income, like other accounting measures, is susceptible to manipulation through such things as aggressive revenue recognition or by hiding expenses. When basing an investment decision on net income numbers, it is important to review the quality of the numbers that were used to arrive at this value.
2. For example, suppose that your gross income is $50,000 and you have $20,000 in deductions and credits. This leaves you with a taxable income of $30,000. Then, suppose that another $5,000 of income tax is subtracted; the remaining $25,000 will be your net income.
DEFINITION of 'Comprehensive Income'
The change in a company's net assets from nonowner sources over a specified period of time. Comprehensive income is a statement of all income and expenses recognized during that period. The statement includes revenue, finance costs, tax expenses, discontinued operations, profit share and profit/loss.
INVESTOPEDIA EXPLAINS 'Comprehensive Income'
Companies typically report comprehensive income in a separate statement from income resulting from owner changes in equity, but have the option of providing information in a single statement. Many firms shy away from the single statement approach because it mixes owner and nonowner activity, which can muddle the underlying information.
DEFINITION of 'Net Income - NI' …show more content…
An individual's income after deductions, credits and taxes are factored into gross income. Deductions and credits are subtracted from gross income to arrive at taxable income, which is used to calculate income tax. Net income is income tax subtracted from taxable income.
INVESTOPEDIA EXPLAINS 'Net Income - NI'
1. Net income is calculated by starting with a company's total revenue. From this, the cost of sales, along with any other expenses that the company incurred during the period, is removed to reach earnings before tax. Tax is deducted from this amount to reach the net income number. Net income, like other accounting measures, is susceptible to manipulation through such things as aggressive revenue recognition or by hiding expenses. When basing an investment decision on net income numbers, it is important to review the quality of the numbers that were used to arrive at this value.
2. For example, suppose that your gross income is $50,000 and you have $20,000 in deductions and credits. This leaves you with a taxable income of $30,000. Then, suppose that another $5,000 of income tax is subtracted; the remaining $25,000 will be your net income.