Other operating income
Other operating income refers to various types of income that a company earns from activities that are not part of its primary business operations but are still related to its overall business activities. This income may include, but is not limited to, rental income, interest income, commission income, government grants, and gains from the sale of assets. Other operating income is typically listed on the income statement (profit and loss statement) and is often detailed in the notes to the financial statements.
Definition: Other operating income refers to various types of income that a company earns outside of its main business activities but still related to its operations. This income may include, but is not limited to, rental income, interest income, commission income, government grants, and gains from the sale of assets. Other operating income is usually listed on the income statement (profit and loss statement) and detailed in the notes to the financial statements.
Origin: The concept of other operating income emerged as corporate financial management became more complex. Early financial statements primarily focused on main business income, but as business activities diversified, non-main business income also became an important part of financial statements. By the mid-20th century, international accounting standards began to require companies to disclose other operating income in their financial statements to provide more comprehensive financial information.
Categories and Characteristics: Other operating income can be divided into the following categories:
- Rental Income: Income earned by a company from renting out real estate or equipment. This type of income is usually stable but relatively small in amount.
- Interest Income: Income earned by a company from deposits, bonds, and other financial instruments. This type of income is closely related to the company's investment activities.
- Commission Income: Income earned by a company from acting as an agent in sales or providing services. This type of income is usually related to the company's marketing activities.
- Government Grants: Various subsidies and grants received by a company from the government. This type of income is usually uncertain but can be substantial in amount.
- Gains from the Sale of Assets: Income earned by a company from selling fixed assets or investments. This type of income is usually one-time but can be substantial in amount.
Specific Cases:
- Case 1: A manufacturing company, in addition to its main product sales, rents out some of its idle factory buildings to other companies, earning an annual rental income of 500,000 yuan. This rental income is considered other operating income.
- Case 2: A technology company earns an annual interest income of 200,000 yuan from investing in government bonds. This interest income is also considered other operating income.
Common Questions:
- Question 1: Does other operating income affect a company's main business income?
Answer: Other operating income does not directly affect a company's main business income but does impact the company's total income and net profit. - Question 2: How to distinguish other operating income from main business income in financial statements?
Answer: In financial statements, other operating income is usually listed separately and detailed in the notes to distinguish it from main business income.
