Posted in Finance, Accounting and Economics Terms, Total Reads: 500
Definition: Non-Operating Expenses
In the financial statements of a company, an expense that is incurred by activities that do not pertain to the core operations of a business are non-operating expenses. These may be incidental and should often be exempted from any analysis that deals to check the performance of the company at an operational level. Accountants usually remove these non-operating expenses and revenues alike to gauge the performance of the core business while ignoring the effects of irrelevant, infrequent issues.
Typical forms that non-operating expenses may take include costs of borrowing i.e. interest charges, costs of restructuring, reorganizing, forex exchanges, etc. Employee benefits also typically feature in the non-operating expenses.
On the other hand, operating expenses are the costs of its regular business activities. These do not including the cost of goods sold but have administrative expenses, office supplies and salaries of employees. Commissions and advertising are a part of the sales expenses.