above-the-line

Promotion or advertising of a product or service using media such as television, radio, magazines, and newspapers. This type of promotion requires commission to be paid to an advertising agency, in contrast to sales promotions, direct mail, and similar marketing tactics that are deemed below-the-line.

The term is also used to refer to an accounting practice. Prior to Financial Reporting Standard 3 (FRS 3), ‘Reporting Financial Performance’, which was introduced in the UK in 1992, above-the-line was used to distinguish exceptional from extraordinary items. Exceptional items, which were classified as occurring within the purposes of the business, were included above the line drawn on the accounts that separates how the profit is arrived at from how it is distributed. Extraordinary items were included below the line and were incurred outside the usual purposes of the business. Creative use of this practice meant that a profit on the sale of an item that was ambiguous could be included above the line to inflate profits and increase the earnings per share. Similarly a loss to an item that might justifiably have been entered above the line as an exceptional item might be entered as an extraordinary item thus flattering the profit figure. FRS 3 led to both items being included above the line.