The difference between net income and comprehensive income is known as other comprehensive income.

Other comprehensive income includes unrealized gains and losses on certain investments in securities, foreign currency items, and certain pension liability adjustments.

Net income is reported on the income statement and is included in the retained earnings section of stockholders’ equity. Other comprehensive income items are not reported on the income statement, and are included in the accumulated other comprehensive income section of stockholders’ equity.

The accounting for comprehensive income is provided in the Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, available for reading at www.FASB.org/st.

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About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

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