Use of above and below the line

"The line" is what separates gross profit elements from operating elements on the Profit and Loss (P&L) statement. The reason it's important -- and handy -- to differentiate between these two sections is because gross profit items, like sales and cost of goods sold (COGS), are variable month-to-month, while operating expenses and associated items are typically more constant.

For example, as sales fluctuate during the year, so does COGS. But regardless of sales revenue, rent, payroll, depreciation, insurance, etc. are not going to fluctuate as much, if at all.

So, "above the line" and "below the line" are handy ways to express which part of the P&L you're talking about.