What does AOCI stand for?

AOCI stands for Accumulated Other Comprehensive Income. This term refers to a component of shareholders' equity that includes all the unrealized gains and losses that are not included in the net income reported on the income statement. AOCI typically encompasses items such as foreign currency translation adjustments, unrealized gains and losses on certain types of investments (like available-for-sale securities), and certain pension plan gains or losses.

This concept is important in accounting because it allows companies to reflect various aspects of their financial performance and position that are not captured in the standard income statement. By including these items in AOCI, companies can provide a more comprehensive view of their financial health. This helps investors and other stakeholders understand the potential financial outcomes of changes in market conditions or currency fluctuations that might affect the company's future earnings.

Understanding AOCI is crucial when evaluating a company's overall financial performance and how it manages various components that might impact its equity position over time.