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What are Gains?

Definition: A gain is any economic benefit that is outside the normal operations of a business
A gain may be realized for many different reasons. An excess of money or fair value of property received on sale or exchange of an asset is considered to be a gain.

A gain may also be recongized when any type of financial instrument is sold for more than its purchase price.

Unrealized Gains

In financial accounting, unrealized gains are gains that are recognized such as an increase in value of land, but not realized because the land has not been sold yet and is still an asset on the books of the company.

How it is recorded in the Financial Statements

A gain is shown on the Income Statement, under a heading such as nonoperating or other revenue. Since it is an increase on the Income Statement, it is recorded on the credit side.

All Income Statement accounts that increase net income are recorded as credits, and all accounts that decrease the bottom line are recorded as debits.

 

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