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Exceptional items

In the ascertainment of business profits for a year it is customary to deduct from turnover the total costs. direct and indirect, incurred in earning that turnover. When income, or an expense. occurs which is thought to be quite foreign to the deeds or purposes of the business it is frequently referred to as an exceptional ‘ item and shown as such after the normal annual profit has been calculated. Such f items naturally appear more often in the accounts published by companies as these organizations are legally obliged to present details of trading to members. It is generally considered, though the arguments are not a little suspect, that such exceptional items should be isolated from normal income and expenses and shown quite separately in the accounts. They are also usually omitted both from profit figures published in the press, regarding that year’s performance. and in comparative figures provided by way of note in subsequent years.

Reference: The Penguin Business Dictionary, 3rd edt.