Dictionary / Above the Line
What does Above the Line mean in accounting?
Quick definition
Financial reportingA phrase used to designate a customary balance sheet or revenue-or expense item in a financial statement. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
Read more below
Examples
A customer invoice and the matching paper bill
On June 8 your print shop invoices a credit-union client $3,650 for letterhead and envelopes. Sales increase $3,650 and accounts receivable increase $3,650. The matching $980 paper bill from a paper supplier, dated June 6, is entered as a bill to cost of goods. Those customary sales, costs, and receivable balances sit in the regular operating section of the June income statement; that is above the line. Watch the ordinary sales and COGS lines, not a special account with this name.
A used oven dumped into catering sales
On November 14 your catering kitchen sells a used combi oven to a restaurant for $1,500. The deposit hits checking, and the QuickBooks Online or Xero bank feed offers Catering income. Accept that match and November looks like a busy events month. Take the oven off the asset list (cost and accumulated depreciation) and put any leftover in gain or loss on sale, shown separately. A one-off asset sale is not a customary above-the-line sales item.
Why it matters
Above the line names the ordinary items on a financial statement: customary sales, job costs, rent, wages, and the usual balance sheet balances. It is not a tax deduction and you will not add an account with this name. You will see the phrase whenever you read a P&L, close a month, or a lender asks about operating results. Mix a one-off recovery or asset sale into regular revenue and the shop looks busier than it was; dump a nonrecurring loss into operating expenses instead of showing it below the line, and a normal month looks broken.
Keep learning
Start with the bookkeeping basics, then compare software when you are ready to pick a tool.
Getting startedBookkeeping basics for small-business ownersWhat bookkeeping is, the records you need, double-entry in plain English, and a monthly rhythm that fits a 1–50 person shop.Updated October 4, 2026
RolesWhat does a bookkeeper do?A bookkeeper records bills, invoices, and bank activity so your books stay current. See the weekly work, the month-end close, and what they do not do.Updated August 18, 2026
Monthly closeMonthly bookkeeping: what to close each monthMonth-end is the job: reconcile banks and cards, age bills and invoices, check payroll, then read the reports. A close checklist for small-business owners.Updated August 18, 2026
Travel and Expense ManagementThe 8 Best Travel and Expense Management Tools for BusinessWe ranked 8 travel and expense tools for business on cards, AI policy checks, and mobile receipt capture, with pricing and honest tradeoffs.Updated August 24, 2026Frequently asked questions
What is Above the Line in bookkeeping?
A phrase used to designate a customary balance sheet or revenue-or expense item in a financial statement.
When should I use Above the Line?
Use Above the Line when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Above the Line?
Above the Line is used for above the line entries, while Abandonment covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.