Above the Line vs Below the Line

Above the Line vs Below the Line Differences

Above the Line relates to income and expenses incurred due to normal operations or above the Line is the gross margin earned by the business. Whereas, below the line is operating expenses, interest, and taxes.

In this article, we look at the top differences between Above the Line vs Below the Line.

What is Above the line?

It is also referred to as costs above the line that separates operating income from other expenses and as costs above the line that separates gross profit from other operating expenses.
The expenses incurred by COGS are wages to labor, manufacturing cost, cost of raw material and all expenses other than interest, tax, and operating expenses.
Companies which are in the service industry and utility companies consider expenses above operating income line as Above the Line cost. It can be said as a cost before operating expenses incurred while manufacturing.
Anything above the operating income line is ATL cost. It is COGS or equivalent accounts that are subtracted from sales done by the company to compute profit.

What is Below the Line?

Below the Line does not affect profit and loss account of the company hence it tells about real the real financial health of the company without artificial inflating.
Below the Line in accounting terms describes item other than the dividend paid or received by the company and retained profit of the company and it describes items like operating expenses, interest and tax.

Above the Line vs Below the Line Infographics

Here we provide you with the top 5 difference between Above the Line vs Below the Line

Above the Line vs Below the Line – Key Differences

The key differences between Above the Line vs Below the Line are as follows –

Above the Line (ATL) on the income statement are profit or income separates from other expenses they are sales cost of goods sold (COGS), cost of sales and cost of services (COS) whereas Below the Line in accounting is an extraordinary income or expenses that company incur but these income or expenses are not repeated nor it affect revenue or profit of company.
ATL expenses incurred by COGS are wages to labour, manufacturing cost, and cost of raw materials whereas BTL are operating expenses, interest and taxes.
It refers to income and expense related to normal operations of the company whereas Below the Line in accounting is an extraordinary income or expenses that company incur but these income or expenses are not repeated nor it affects revenue or profit of the company.
It refers to gross margin earned by the business whereas the item below the gross profit is Below the Line items that include other operating expenses like tax, interest, operating expenses and other extraordinary expenses.

Above the Line vs Below the Line Head to Head Difference

Let’s now look at the head to head difference between Above the Line vs Below the Line

Basis	Above the Line	Below the Line
Definition	ATL on the income statement are profit or income separates from other expenses they are sales cost of goods sold (COGS), cost of sales and cost of services (COS).	BTL in accounting is an extraordinary income or expenses that company incur but these income or expenses are not repeated nor it affects revenue or profit of the company.
Types of Expenses	The expenses incurred by COGS are wages to labour, manufacturing cost, and cost of raw material.	BTL is operating expenses, interest and taxes.
Income and Expense	It refers to income and expense related to the normal operations of the company.	BTL in accounting is an extraordinary income or expenses that company incur but these income or expenses are not repeated nor it affects revenue or profit of a company.
Frequency	ATL is repetitive expenses.	BTL is a non-repetitive expense.
Also, refer to	It refers to margin earned by the business	BTL items that include other operating expenses like tax, interest, operating expenses and other extraordinary expenses.

Final Thought

Above the Line and Below the Line is used by the company to manage the resources available in a company to deliver a surplus result. ATL on the income statement are profit or income separates from other expenses they are sales cost of goods sold (COGS), cost of sales and cost of services (COS) and Below the Line in accounting is an extraordinary income or expenses that company incur but these income or expenses are not repeated nor it affect revenue or profit of company. Above the Line tells about income and expenses that are related to normal operations of a company, profit is calculated by subtracting expenses from revenue if the revenue exceeds the cost then that means the company has booked profit and if the cost exceeds the revenue means the company has booked loss during an accounting period.