Question

give two examples of operating vs. nonoperating assets and liabilities, and explain why they are categorized as such

Answer 1

Assets.

Operating - Plant & Machinery Are used in the day to day operations & hence Operating

Inventory is the basic raw material from which goods are produced.

Non Operating - Investments in shares are not directly linked to the business of manufacturing Co.

Plant & Machinery for Banks will be treated as Non operating

Liabilities

Operating - Dues to the creditors, as creditors supply raw materials for manufacturing.

The salary due to staff, as they provide service to the organization.

Non Operating - Taxes due to the government.