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Differemce between direct and indirect expenses

For the prepration of trading and profit loss account how we decide an expense is direct or indirect expenses , like transporation expenses


nisam M

nisam M

CA Foundation

14K+

15-Feb-21 23:35

45

Answers (4)

Direct express are like factory expenses which comes under trading account like freight in wards etc Indirect expenses general expenses other than factory expenses like salary, freight outwards etc.


sai t

sai t

CA Foundation

300

16-Feb-21 09:23

Little more detail please , what is the logic


nisam M

nisam M

CA Foundation

14K+

16-Feb-21 23:53

nisam M

Little more detail please , what is the logic

Suppose your doing computer business like buying and selling computers.computers are brought to your shop.for bringing computer u will pay some charges they are direct expenses these comes under trading account (freight inwards) You will purchase computers for selling (purchase expenses) after purchasing you will sell it to customers (selling expenses) after purchase and selling they will be some stock available with you at the end of the year (closing stock) these are direct expenses comes under trading account. For selling computers you will assign some persons and provide salary to them (salary expenses) you will store some computers in godown (Godown expenses) for bringing computer from Godown you will pay some charge to colie (wages) these comes under profit and loss account. Please go through this example you will understand very clearly.


sai t

sai t

CA Foundation

300

17-Feb-21 08:30

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