Line Items: Definition, Accounting, In the Income Statement

Companies prepare four financial statements, which are crucial in describing their operations. These financial statements include records of the company’s activities from the past. Usually, they consist of the balance sheet, income statement, statement of cash flows, and statement of changes in equity. These statements consist of records, each represented on a separate line.

What is a Line Item in accounting?

A line item in accounting is a record that represents the category of items in the financial statements. This term applies in the context of International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). Through these, companies combine several accounts under one heading. That heading represents the category to which those accounts relate.

Line item accounting involves categorizing items on the financial statements in separate lines. Usually, this term applies to the balance sheet and income statement. On the balance sheet, line items include assets, liabilities, and equity. In contrast, income statement line items consist of incomes and expenses. These items include several accounts from the accounting system under one heading.

What are the line items in the Balance Sheet?

As mentioned, line items in the balance sheet include three categories. Companies may segregate items into current and non-current assets and liabilities. Nonetheless, each section will have several headings listed under them. Those headings constitute the line items in the balance sheet.


Assets are resources owned or controlled by a company that bring inflows of economic benefits. Some of the prevalent line items under this category include the following.

  • Fixed assets
  • Intangible assets
  • Inventories
  • Cash and cash equivalent
  • Prepaid expenses
  • Accounts receivable


Liabilities include obligations from past events that result in outflows of economic benefits in the future. The line items appearing under this section are below.

  • Loans
  • Leases
  • Short-term borrowings
  • Accounts payable
  • Accrued expenses
  • Tax payable


Equity represents the residual interest of shareholders in a company. This interest comes after deducting its liabilities from its assets. Usually, the following line items appear under the equity section in the balance sheet.

  • Share capital
  • Share premium
  • Retained earnings
  • Equity reserves

What are the line items in the Income Statement?

The income statement does not segregate line items under different headings. Instead, it involves a calculation of profits based on revenues and expenses. In that regard, it separates various expenses to measure different types of profits. Therefore, the line items in the income statement include revenues, expenses, and profits.

In accounting, revenues are the inflows of economic benefits during an accounting period. In contrast, expenses are the opposite and represent outflows. Profits are the residual amount after reducing those expenses from revenues. Some of the line items appearing on the income statement include the following.

  • Net sales
  • Cost of goods sold
  • Gross profit
  • Administrative and operating expenses
  • Operating profit
  • Financial expenses
  • Taxes
  • Net profits

Companies may include more line items to present other expenses as well. For example, they may consist of marketing and selling expenses.


The term line item in accounting refers to the categories of items in the financial statements. These financial statements include the balance sheet and income statement. Furthermore, line-item accounting refers to categorizing items on the separate lines on those statements. The line items in the income statement and balance sheet differ, as listed above.

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