What is Accumulated Other Comprehensive Income (AOCI)?

Accumulated Other Comprehensive Income (AOCI) is a part of a company’s overall value that includes unrealized gains and losses from certain financial items. These gains and losses are not yet recorded in the income statement but are reported as part of comprehensive income.

Comprehensive income is a broader measure of a company’s financial performance that includes more than just its net income. It takes into account other gains and losses that are not included in the income statement, such as changes in the value of investments, foreign currency fluctuations, and adjustments for certain benefit plans.

AOCI represents the total of these unrealized gains and losses (Unrealized Capital) that have not been included in the income statement yet. It is shown separately in the shareholders’ equity section of the company’s balance sheet. AOCI can change over time as the value of these items fluctuates. When these gains and losses are eventually realized, they are transferred from AOCI to the income statement.

In simple terms, AOCI is a way to keep track of gains and losses that haven’t been officially recorded in a company’s income statement yet. It helps provide a complete picture of a company’s financial performance.

For more about Unrealized Capital, visit this article: What is Unrealized Capital?

Caroline Grimm

Caroline Grimm is an accounting educator and a small business enthusiast. She holds Masters and Bachelor degrees in Business Administration. She is the author of 13 books and the creator of Accounting How To YouTube channel and blog. For more information visit: https://accountinghowto.com/about/

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