Question

Answer the following question in your own words. Your answer must have a 150 minimum word count:

• Differentiate between operating income and non-operating income for a typical community hospital and give examples of each one.

Answer 1

Operating income Vs non operating income

A community hospital

Operating income is the amount of profit that obtained from the operating activities of an organization after spending for the operating expenses of the particular organization. Operating expenses are the expenses for the activities that is happening to run an an organization's day to day functioning such as rent , pay roll, employees benefits and so on. Operating income is the result of an organization's core activities. Whereas non operating income is gain or expenses from the activities outside the core activities of an organizations such as interest charges, asset sales etc.

In a community hospital, the operating income is obtained from screening charges, lab tests, Health care charges etc. Operating income shows that how well the hospital is running.

Non operating income of a community hospital is a secondary income for the organisation. It can be obtained from the cafeteria, parking fees, income from shop and vending machines inside the hospital etc. Non operating income also calculated after deducting the losses happened during the activities outside the core functioning of the hospital.