Other operating income is an important part of all company operations. They help reduce operating costs, increase profits and are an important source of revenue for companies.
What is other operating income?
Other operating income is all other income that a company earns from its operations. These revenues can be divided into three categories: operating revenues, non-operating revenues and other operating revenues.
Operating income is revenue derived from a company’s core business activities. This includes sales of products and services, earning from manufacturing activities, earnings from rent or lease, and other charges related to the company’s operations.
Non-operating income is income derived from activities that are not the company’s primary purpose. This includes, for example, profits from investments, bank interest, rental or lease income, copyrights, insurance profits, real estate profits and others.
Other operating income is all other income that a company earns from its operating activities. This includes profits from product sales, profits from unintentional services, profits from unintentional production activities, license fees, product development fees, commercial transaction fees, consulting fees, and other fees related to business operations.
What is included in other operating income?
Other operating income includes all unusual income received by a company that is not related to its core operations. Examples of operating income include license fees, rental fees, intellectual property fees, consulting fees, court judgment fees, as well as fines and damages.
Recording of other operating income
Recording other operating income is an essential element that can significantly affect a company’s bottom line. Operating income that remains outside of standard income is often forgotten and can be difficult to monitor. Recording other operating income is designed to ensure that all income is properly recorded and reflected in the company’s financial results.
The recording of other operating income includes all income that is not a company’s standard sources of income, such as sales, services and credit. These revenues include, but are not limited to, income from fixed assets, dividends, interest, sales taxes, lottery winnings, grants, compensation, awards, product sales and others.
In order to effectively monitor other operating income, it is necessary to set up a system of revenue records that accounts for all sources of income. This system should include all details of other income, including the date of income, source of income, amount of income and other relevant information. This system should be integrated with the company’s financial system so that all data can be used to analyze and evaluate financial performance.
The recording of other operating income is essential to explain the company’s financial performance. If revenues are improperly recorded, this can have a detrimental effect on the company’s bottom line, as revenues will be understated or overstated.
Therefore, all companies should implement an effective system of recording other operating income to ensure that all revenues are properly recorded and reflected in the financial results. Effective recordkeeping of other operating income can significantly reduce the risk of erroneous revenue recording and help a company achieve better financial results.
Other operating income – examples
Other operating income is all non-core income related to a company’s core operations that allows the company to earn additional revenue. Operating revenues include passive revenues, such as property rentals, and those that require activity. Examples of other operating income include:
- Investment returns. Investment returns are any income earned from investments, such as dividends or interest on bank deposits.
- License revenues. Licenses are permissions granted by one company to another company to use its product or service in exchange for compensation.
- Rental income. A lease is an agreement whereby the owner of a property rents it to another person or company in exchange for a specified fee.
- Service fee revenue. Service fee income is any fees received for services rendered. These can include fees for consulting, advisory services, transportation services, hosting services, etc.
- Lease revenue. A lease is an agreement whereby the owner of an item gives another person or company the right to use that item in exchange for a certain fee. This can include items such as cars, machinery or equipment.
- Revenue from transactions. Transactions are purchases and sales made by a company that allow the company to earn additional revenue. These can be purchase and sale transactions, swap transactions or licensing transactions.
- Compensation revenue. Compensation is any money a company receives in return for damages or losses incurred as a result of an accident or breakdown.
Other operating income is an important source of revenue for companies and can significantly increase profits. These revenues allow companies to reduce risk and provide revenue growth over the long term.
