ELI5: Explain Like I'm 5

Accumulated other comprehensive income

Okay kiddo, so let's talk about something called "accumulated other comprehensive income".

When a company makes money, it records that money in a special place called "income statement". But sometimes, some things happen that can change how much money the company really has, even if they haven't sold anything new or spent anything extra.

For example, if the company owns something like stocks or bonds, their value might go up or down. Or if they do business with companies from other countries, the exchange rate of different currencies might change. These things can affect how much money the company has, but they don't show up on the regular income statement.

So to keep track of these changes, the company uses a special area called "accumulated other comprehensive income", or AOCI for short. It's like a separate bucket where they put all the changes that can affect the company's finances but don't belong in the regular income statement.

Now, the important thing to know is that AOCI isn't really a source of cash that the company can use to operate or pay debts. It's more like a way to keep track of the company's overall financial health.

So if you see something called "accumulated other comprehensive income" on a company's financial statement, just remember that it's a special bucket where they put things that can affect their money, but it's not the same as the money they use to run the business or pay dividends.