The difference between recurring and nonrecurring general and administrative expenses can best be understood as the difference between regular, fixed expenses a company expects to have on an ongoing basis as an ordinary cost of doing business versus a one-time, extraordinary expense incurred by a company.
General and Administrative Operating Expenses
General and administrative operating expenses are the normal, ongoing expenses required for operating a company in the company’s chosen line of business. These expenses appear on a company’s income statement under the heading of “operating expenses.” Typically, general and administrative expenses include things such as salaries for company executives and wages or salaries for employees; any research and development costs; travel and related expenses; computer support services; and depreciation that may apply to property, equipment or other company assets.
Nonrecurring Charges or Expenses
Nonrecurring expenses are specifically designated on a company’s financial statements as an extraordinary or one-time expense the company does not expect to recur, at least not on any regular basis. Under general and administrative expenses, examples of nonrecurring or one-time expenses include things such as the purchase of a new manufacturing facility or a major facility upgrade; severance pay costs incurred from a work force reduction; or repair costs following a natural disaster or accident.
Nonrecurring expenses are important for investors to note when analyzing a company’s financial statements because such expenses may significantly and negatively skew a company’s profitability for the accounting period covered by the statement. One-time expenses are commonly factored out of equity evaluations of a company since investors seek to determine a company’s likely ongoing level of profitability rather than an unusual level caused by a nonrecurring expense during a single accounting period.