Loading the player...

What is 'Comprehensive Income'

Comprehensive income is a statement of all income and expenses recognized during a specified period. The statement includes revenue, finance costs, tax expenses, discontinued operations, profit share and profit/loss. Most firms 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.

BREAKING DOWN 'Comprehensive Income'

By definition, the opposite of the word comprehensive is incomplete, empty, limited or narrow. Some may say it is exclusive of something or unfinished in some way. So it is not surprising that when accountants speak of detail, they reference the word comprehensive. The more comprehensive a financial statement, the more detailed.

Comprehensive Income

One of the most important financial statements is the income statement. It provides an overview of sales and expenses, including taxes and interest. At the end of the income statement is net income or earnings, but net income on the income statement is not necessarily all inclusive. That is, it only includes income from business operations. These are the activities that occur due to the company's business model and day-to-day activities. There are times when companies, especially large companies, make or lose money from the change in value of certain assets. These changes can be found on the cash flow statement; however, the net impact to earnings is found in comprehensive or other comprehensive income on the income statement.

A Few Examples

For a personal finance example, say a co-worker won the lottery. The lottery winnings are considered part of his taxable or comprehensive income but not regular income. In the corporate world, comprehensive income examples include unrealized gains and losses on available-for-sale investments. Comprehensive income also includes cash flow hedges, which can change in value depending on the value of the securities in the market, and debt securities transferred from available for sale to held to maturity, which may incur unrealized gains or losses. Gains or losses can also be incurred from foreign currency transaction adjustments, or gains and losses in investments in foreign entities. Gains or losses in pensions and/or postretirement benefit plans are also included in comprehensive income.

In general, items that fall in these categories are infrequent; however, they are not always unusual in nature. For example, when the stock market reached a height in 2000, many companies recorded gains in comprehensive income from investments that had appreciated in value. This appreciation, and the gains from the sale of these investments, inflated earnings. Changes in comprehensive income can also deflate earnings.

  1. All-Inclusive Income Concept

    A method of income reporting that includes the total non-owner ...
  2. Common Size Income Statement

    An income statement in which each account is expressed as a percentage ...
  3. Income Statement

    A financial statement that measures a company's financial performance ...
  4. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and ...
  5. Net Income - NI

    1. A company's total earnings (or profit). Net income is calculated ...
  6. Income

    Money that an individual or business receives in exchange for ...
Related Articles
  1. Investing

    What's Accumulated Other Comprehensive Income?

    Accumulated other comprehensive income lists gains and losses a firm has yet to settle.
  2. Investing

    What is Comprehensive Income?

    Comprehensive income is a part of the owners’ equity section of the balance sheet.
  3. Investing

    Understanding the Income Statement

    The best way to analyze a company—and figure out if it's worth investing in—is to know how to dissect its income statement. Here's how to do it.
  4. Investing

    The Importance Of Other Comprehensive Income

    Understanding and analyzing OCI greatly improves financial analysis, especially for financial companies.
  5. Investing

    Is Net Income The Same As Profit?

    Net income and profit both deal with positive cash flow, but there are important differences between the two concepts.
  6. Investing

    What Is The Difference Between A Cash Flow Statement And An Income Statement?

    A firm’s cash flow statement measures the sources and uses of its cash. The income statement shows how it is financially performing.
  7. Investing

    Cleaning Up Dirty Surplus Items On The Income Statement

    Dirty surplus items can skew net income. Knowing how to account for them will give you a cleaner picture.
  8. Investing

    What's a P&L Statement?

    A profit and loss statement, also called the income statement, is a financial statement that companies use to report their income and expenses for a quarter or a year.
  9. Personal Finance

    All About Income

    Income is the money you or a business earns by providing goods or services, or through investments.
  1. What are the differences between comprehensive income and other comprehensive income?

    Learn what the accounting terms "comprehensive income" and "other comprehensive income" can tell an investor's financial ... Read Answer >>
  2. What is the difference between comprehensive income and gross income?

    Learn the specifics of both comprehensive income and gross income, how they are legally defined, and the primary difference ... Read Answer >>
  3. What are some examples of items that count as comprehensive income?

    Take a look at some of the more common examples of other comprehensive income, or OCI, and learn how OCI differs from standard ... Read Answer >>
  4. How does comprehensive income get reported on my 1040?

    Find out how comprehensive, or total, income is reported on IRS Form 1040, including some examples of the many types of income ... Read Answer >>
  5. What is the Difference Between Operating Income and Net Income?

    Understand the difference between operating income and net income, including the calculations and interpretations of each, ... Read Answer >>
  6. How are the three major financial statements related to each other?

    Learn why investors analyze a company's financial statements, and how the income statement, balance sheet and cash flow statement ... Read Answer >>
Hot Definitions
  1. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  2. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  3. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  4. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  5. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  6. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
Trading Center