Accounting Earnings


DEFINITION of 'Accounting Earnings'

The amount of money a company has earned during a given period, usually a quarter or year, as reported based on proper accounting standards. Accounting earnings help to measure a company's profitability, but investors should consider not just earnings quantity, but also earnings quality, in evaluating a company's accounting earnings. Earnings quality considers whether earnings are repeatable, controllable and bankable.

BREAKING DOWN 'Accounting Earnings'

When a publicly traded company announces its accounting earnings, investors' reaction to the news will usually cause the stock's price to move. After releasing the earnings report, the company's management will discuss the results with investors in an earnings call. Generally accepted accounting principles (GAAP) allow accounting earnings to be calculated in a specific manner, while some accounting practices can be selected specifically for their impact on creating accounting earnings that support management goals, which may not always coincide with shareholder goals.

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