Earnings of an entity as reported and presented in its statement of income (SOI). Accounting earnings, also known as net income (NI), are calculated by subtracting an entity’s expenses from its revenues. As an item on profit or loss (statement), it indicates how much is left over after an entity has covered the explicit costs (operational costs).
Accounting earnings are affected by applicable accounting conventions regarding the valuation of an entity’s assets such as inventories (such as, LIFO versus FIFO methods) and the techniques used for capitalization of expenditures (e.g., recognition of capital investments over time such as depreciation).
