What are Non-Recurring Items?
Non-Recurring Items are gains and losses recognized on the income statement that must be adjusted, as they are neither part of ongoing core operations nor an accurate reflection of future performance.

The act of “scrubbing” refers to adjusting financial data for non-recurring items to ensure the company’s cash flows and metrics are normalized to depict its actual ongoing operating performance.

Recurring Items → Income and Expenses Likely to Continue
Non-Recurring Items → One-Time Income and Expenses Unlikely to Continue
Public companies must file their financial statements — i.e. the income statement, cash flow statement, and balance sheet — following rules established under Generally Accepted Accounting Principles (GAAP).

But while GAAP attempts to standardize financial reporting in a fair, consistent way with as much transparency as possible, there are still imperfections in certain areas where discretion is necessary.

Understanding the historical performance of a business is critical for forecasting its future performance, since past performance impacts forward-looking assumptions.

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