What Are Earnings?

Earnings refers to the financial benefits of the overall performance of a company. It also refers to the net income of the company. Earnings is the amount by which corporate taxes are paid. There are many different terms for the accounting records of earnings, as EBIT, EBITDA and FIFF. Other terms that can be used are net income, gross profit, gross margin and cost of sales.


The objective of accounting is to record the profits of the business. The process of recording these profits and the measurement of these profits are calling bookkeeping. Accounting measures the profitability of the company by the net income from the gross sales less the cost of good sold, less the income taxes payable to the government and net income from the net income from sales less the expenses of the company. Other factors such as the effect of volume and type of sales, market competition, market trends, and the like are taken into account.

There are two major areas of accounting practice, one is the financial statement preparation and the second is the reporting of earnings. The accounting records of the company’s net income, the earnings per share, net income, operating profit, and other specific items are all recorded in the company’s financial statements. The accounting policies are based on principles that are generally accepted throughout the world. The accounting policies include maintaining good accounts and records, identifying the sources of income and the manner in which such incomes are reported, standardizing the method of reconciliation of accounting records, and maintaining adequate controls for assurance regarding the measurement of accounting estimates. This is the general nature of accounting.