An operating expense is a cost that a business incurs in the course of its normal operations.
These expenses are essential to the company’s day-to-day activities and are directly related to the production or sale of its products or services.
Examples of operating expenses include salaries, rent, utilities, and supplies.
On the other hand, non-operating expenses are costs that are not directly related to a company’s primary business activities.
These expenses are typically one-time or unusual costs that do not occur regularly.
Examples of non-operating expenses include interest income, gains or losses from the sale of assets, and income taxes.
When it comes to interest expense, the classification as operating or non-operating depends on the purpose of the loan.
If the loan was obtained to finance the company’s regular business operations, then the interest expense is considered an operating expense