Non-Operating Expense meaning

Posted by Pijush Roy
Non-Operating expenses are those expenses which are not occurred from normal business activities. Every business has own specific business activities. Non-operating expenses are not part of company main operation. Most common non-operating expense is interest, borrowing charge, exchange difference, abnormal cost, non-recurring onetime expense etc. All expenses which are not related to his operation will be his non-operating expenses.

For example, if business main activity is making and sells of furniture, main business operation is making and selling furniture. For these activities, business needs to lend or borrow money and return back within permissible time with interest. Borrowing money is not main operation, so Interest expense is treated as a Non-Operation Expense. But for the banking or any financial institution, interest expense is operating expense because their main business operation is lending and borrowing money.

Significance of Non-operating expense calculation
Management need to eliminate the effect of non-operating expense for taking managerial or financing decision because it is not including the daily business activities. Non-operating expense is mentioned separately in the Income Statement.

Non-operating expenses List
Interest of debenture
Financial Expense or charge
Depreciation on non-operating assets
Dividend paid (on equity capital, Sweat equity capital, pref dividend)
Flotation Cost
Amortization of Amalgamation Adjustment Account
Expense on Issue of Share & Debenture
Loss of sale of Assets
Discount on Issue of share
Discount on issue of debenture
Amortization of Goodwill
Amortization of Preliminary expense
Amortization of profit and loss account debit balance
Amortization of deferred revenue expense




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Pijush Roy, Founder & Author of "Share Your Knowledge", is a young freelance blogger, a reader, a painter, .....read more


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