A category of costs/ expenses that do not directly relate to core operations/ activities. These costs do not qualify as operating expenses, given their disconnection with an entity’s core operations. By nature, these costs are non-recurring (and hence, they are also called non-recurring items or one-time charges, etc.)

Examples of non-operating expenses include legal costs (payments to settle lawsuits), finance costs (interest payments on debt to creditors/ lenders), restructuring costs, inventory write-offs, and any one-time deductions (in miscellaneous income deductions) in the income statement.

As a general rule, material amounts included under miscellaneous income deductions are separately presented in the income statement or in a footnote, properly disclosing the nature of the transactions out of which such expenses arise.

Non-operating expenses may be combined with non-operating income as long as the individual amounts involved are not significant. However, interest expense and amortization of debt discount are presented on the face of the income statement.