Non-Recurring: Definition, Usage, and Reporting

“Non-recurring” is an adjective used in financial and business contexts to describe charges, expenses, or items that do not happen regularly. It is often contrasted with “recurring,” which refers to regular, fixed expenses that a company expects to have on an ongoing basis.

Usage

The word “non-recurring” is commonly used in financial statements, where it is used to differentiate between recurring and non-recurring expenses. Recurring expenses are typically reported as indirect costs on the income statement and are also factored into the balance sheet and cash flow statements. Non-recurring expenses, on the other hand, are reported as extraordinary or one-time expenses that are not expected to continue regularly.

Hyphenation

The hyphenation of the word “non-recurring” can vary depending on the style guide used. Some style guides prefer closed forms like “nonrecurring,” while others may use hyphens like “non-recurring”. The Chicago Manual of Style, for example, considers “non” as a prefix and tries to minimize hyphens for readability. As such, most words beginning with “non” are closed, but hyphens are used when it would be confusing to the reader.

Reporting

In financial statements, recurring expenses are reported as regular, fixed expenses that a company expects to have on an ongoing basis. These expenses typically appear on the income statement as indirect costs and are also factored into the balance sheet and cash flow statements. Non-recurring expenses, on the other hand, are reported as extraordinary or one-time expenses that are not expected to continue regularly. These expenses may be caused by a variety of factors, such as mergers, acquisitions, purchases of real estate or equipment, large-scale facility upgrades, severance pay costs from a workforce reduction, or repair costs following a natural disaster or accident.

Conclusion

“Non-recurring” is an important term in financial and business contexts, as it is used to differentiate between regular, fixed expenses and one-time or extraordinary expenses. The hyphenation of the word can vary depending on the style guide used, and the reporting of non-recurring expenses in financial statements is subject to specific guidelines.

Sources

1. Cambridge Dictionary: https://dictionary.cambridge.org/us/dictionary/english/non-recurring
2. English Stack Exchange: https://english.stackexchange.com/questions/361297/which-is-correct-non-recurring-nonrecurring-or-non-recurring
3. Investopedia: https://www.investopedia.com/ask/answers/072815/what-difference-between-recurring-and-nonrecurring-general-and-administrative-expenses.asp

FAQs

What does “non-recurring” mean?

“Non-recurring” means not happening regularly or not occurring on a regular basis. It is often used in financial and business contexts to describe charges, expenses, or items that are one-time or extraordinary in nature.

How is “non-recurring” used in financial statements?

In financial statements, “non-recurring” is used to differentiate between recurring and non-recurring expenses. Recurring expenses are regular, fixed expenses that a company expects to have on an ongoing basis, while non-recurring expenses are one-time or extraordinary expenses that are not expected to continue regularly.

What are some examples of non-recurring expenses?

Examples of non-recurring expenses include merger and acquisition costs, restructuring charges, asset impairments, and gains or losses from the sale of assets.

How is “non-recurring” hyphenated?

The hyphenation of “non-recurring” can vary depending on the style guide used. Some style guides prefer closed forms like “nonrecurring,” while others may use hyphens like “non-recurring”. The Chicago Manual of Style, for example, considers “non” as a prefix and tries to minimize hyphens for readability. As such, most words beginning with “non” are closed, but hyphens are used when it would be confusing to the reader.

What is the difference between “non-recurring” and “one-time”?

“Non-recurring” and “one-time” are often used interchangeably, but there can be a subtle difference between the two. “Non-recurring” typically refers to expenses that are not expected to happen again in the future, while “one-time” can also refer to expenses that happen only once but may be expected to happen again in the future. For example, a company may incur a one-time expense for a marketing campaign, but it may expect to incur similar expenses for future marketing campaigns.

How are non-recurring expenses reported in financial statements?

Non-recurring expenses are typically reported in financial statements as extraordinary or one-time expenses. They are usually reported below operating expenses on the income statement and may also be disclosed in the notes to the financial statements.

Why is it important to distinguish between recurring and non-recurring expenses?

Distinguishing between recurring and non-recurring expenses is important because it helps investors and other stakeholders understand the true profitability and financial performance of a company. Non-recurring expenses can significantly impact a company’s profitability in a particular period, and excluding them from recurring expenses can provide a more accurate picture of the company’s ongoing financial performance.

What are some examples of non-recurring income?

Examples of non-recurring income include gains from the sale of assets, insurance proceeds from a casualty loss, and government grants.