Investment income generally qualifies as what type of revenue?

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Investment income is classified as nonoperating revenue because it arises from activities that are not part of an organization’s primary operations, typically investment earnings such as interest, dividends, and capital gains. This type of revenue is generated from resources that are not directly tied to the main operating functions of the organization, like providing services or selling goods.

Nonoperating revenue is critical for understanding an organization's overall financial health, as it can significantly impact net income but does not indicate the effectiveness of the entity's core mission-related activities. In contrast, other types of revenue, such as program revenue, are directly linked to services or products offered by the organization, while capital revenue usually represents funds sourced for long-term investments or improvements. General fund revenue pertains to funds that support the overall budget but does not specifically capture the nature of income derived from investments.

Thus, the classification of investment income as nonoperating revenue is consistent with accounting principles that delineate operational from nonoperational activities.

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