Month End Glossary

Non-Recurring Item

A non-recurring item is an unusual or infrequent financial transaction or event that is not expected to happen repeatedly.

A non-recurring item refers to a financial transaction, expense, or event that is unusual in nature or infrequent in occurrence and not expected to regularly appear in a company's financial statements. These items often need to be clearly disclosed in financial documents due to their irregular nature and potential to distort the understanding of a company's regular performance.

Examples of non-recurring items include the gain or loss from the sale of a significant asset, expense or income due to a natural disaster, or expenses related to restructuring or layoffs. For instance, if a company sells a major division of their business, the resultant gain or loss is considered a non-recurring item and would be distinctly documented to not misrepresent normal operations.

Detailing non-recurring items helps stakeholders, such as investors and analysts, better understand the ongoing operational performance sans these extraordinary events. They are often segregated on financial statements and can significantly impact measures of profitability, such as net income, for the period in which they occur.

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