Non-Operating Profit

Non-Operating Profit results from sources other than the normal or primary activities of the business enterprises. When a trading concern gets rent from a piece of vacant land owned by it, it would be treated as a non-operating profit. Similarly dividends or interest or both received on investments or interest on fixed deposit account with bank or profit on the sale of fixed assets are all non-operating profits because they accrue to the business enterprise from activities which are incidental to its main or normal activities. It is relevant to state that non-operating profits because they accrue to the business enterprise from activities which are incidental to its main or normal activities. It is relevant to state that non-operating expenses or deductions which are incidental to the main activities of the business enterprise included to interest paid on the borrowings. In practice the non-operating profits is adjusted against the non-operating expenses on non operating losses (i.e., loss on the sale of fixed assets). However, there is no restriction if they are shown separately. When the non-operating profit exceeds non-operating expenses exceed the operating income and when the non-operating expenses exceed the operating profit, the difference is deducted from profit from operations.

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