Operating versus Non-operating Items | CFA Level 1 - AnalystPrep (2024)

FAQs

What are operating items vs non-operating items? ›

Operating activities are all the things a company does to bring its products and services to market on an ongoing basis. Non-operating activities are one-time events that may affect revenues, expenses or cash flow but fall outside of the company's routine, core business. Operating activities include: Setting a strategy.

Non-operating cash flow is comprised of the cash a company takes in and pays out that comes from sources other than its day-to-day operations. Examples of non-operating cash flow can include taking out a loan, issuing new stock, and a self-tender defense, among many others.

Operation items are those items that relate to a bank's core business, such as all types of fees, commissions, principals, interests, advances or penalty calculations. You can also consider them as balance types that add up to a certain deal or used in tracing what happened on a particular deal.

Non-operating income is the portion of an organization's income that is derived from activities not related to its core business operations. It can include items such as dividend income, profits or losses from investments, as well as gains or losses incurred by foreign exchange and asset write-downs.

Short Answer

Operating items report only the principal operations, and non-operating items reports secondary activities of the company.

Operating expenses include rent, equipment, inventory costs, marketing, payroll, insurance, step costs, and funds allocated for research and development. By contrast, a non-operating expense is an expense incurred by a business that is unrelated to the business's core operations.

A few examples of non-operating expenses include interest payments on debt, inventory write-offs, restructuring costs, lawsuits (and many such one-time charges).

Non-operating expense, like its name implies, is an accounting term used to describe expenses that occur outside of a company's day-to-day activities. These types of expenses include monthly charges like interest payments on debt and can also include one-time or unusual costs.

Assets that aren't used to make money are called non-operating assets and could include things like land that isn't being used, vacant buildings, unused or outdated machinery and idle equipment.

Non-cash items are referred to as those entries on a cash flow statement or income statement that do not involve actual cash transactions. In other words, these are expenses that are listed in an income statement that do not involve cash payment.

What falls under operating supplies? ›

An operational supplies and equipment budget is a list of all the supplies and equipment that you need to run your business. This includes things like paper products, office supplies, cleaning products, hardware, and even furniture.

Operating activities are the daily activities of a company involved in producing and selling its product, generating revenues, as well as general administrative and maintenance activities. Key operating activities for a company include manufacturing, sales, advertising, and marketing activities.

Any excess cash and cash equivalents that are not immediately required in financing the day-to-day operations of the company are recognized as non-operating assets.

: not functional or operational : nonoperational.

Tip. Operating expenses are all the costs you incur to bring a product or service to market. Non-operating expenses are costs that are not related to normal business operations, such a relocation costs or paying off a loan.

The assets are recorded in the balance sheet and may be listed separately or as part of operating assets. Non-operating assets do not help in the day-to-day operations of the business, but they may be investments or assets that can be disposed of to generate income to finance the operations of the business.