HomeExpense

|

Direct Expenses are expense which are directly involved in the production process in case of manufacturing or selling process in case of a trading business.

While calculating cost of the goods sold or cost of production it is necessary to include all expenses directly attributable to putting the goods in a saleable condition.For Instance,When Goods are purchased the carriage inward on such purchases is sometimes payable by the buyer.He may also be required to pay freight,duty,clearing charges,dock dues,on imported goods.All these are direct expenses on purchases and must be included in the cost of such purchases.

Similarly, a manufacturing business incurs expenses on labor that is wages, on power,and various other expenses like, factory rent, lighting for the purpose of production.These are also direct expenses incurred for putting the goods in saleable condition.All direct expenses,both on purchase and production will increase the cost of goods.

Following are the Direct Expense in case of a trading Business.

  1. Purchase of goods for sale. – Purchase Account
  2. Freight Involved in the purchase of goods. – Carriage Inward or Freight inward
  3. Wages to trading staff.- Wages Account
  4. Godown or shop rent -Rent paid account.
  5. Electricity for godown & shop –  Electricity Account.
  6. Godown & shop insurance – Insurance Account

Following are the Direct Expense Example in case of a manufacturing business.

  1. Purchase of raw material
  2. Purchase of consumables for machinery.
  3. Transportation & Freight involved in purchasing raw materials and consumables.
  4. Factory electricity & lighting
  5. Wages to factory labors.
  6. Factory rent in case of rented building.
  7. Maintenance charges to Machinery and factory building.
  8. Factory Insurance
  9. Depreciation of Machinery & Amortization Building etc.

Comments (0)

Leave a Reply

Your email address will not be published. Required fields are marked *

shares
error: Content is protected !!

Related pages


cash sales journaltds interest calculationpi invoicevat output tax definitiondepreciation journal entry exampletally software 9.0 free downloadadjusting journal entry exampleswhats ledgeradjusting entry for bad debt expensewhat is furniture and fittings in accountingwhat is brs statementtds recon manualaccounting general entriesdamaged inventory journal entryaccrued payable journal entryhow to write a proforma invoicedefine petty cash voucherfreight in journal entryaccounting rules of debit and creditreceipt ledgerbuy tally softwarewhat is cash voucher in accountingmeaning of creditor in hindiwhat is discount allowed and discount receiveddebtors account definitiontally bottledebtors and creditors meaningsales and purchase ledger templateexample of a contra accountpostdated meaningproforma of bank reconciliation statementtally extensionbank reconciliation statement sampletally erp 9 download free full version downloadpetty cash in tallyincometax tdshow to manage and operate groups in tallyjournal entry for prepaymenttally erp 9 basicsproforma of trial balancesample of debit and credit entryexamples of prepaid expensesdefine tds taxpro forma journal entriesincome tax slabs for fy 2013-14fixed deposit axis bankincome tax slab fy 2013-14 ay 2014-15debenture defintionsundry debtors and sundry creditors meaningdefine sundry itemsprovision for annual leave journal entrywhat is prepaid expensetally erp featuresexcel sheet shortcut keysdefine creditor and debtorrules of double entry system of accountingadjustment accounting entriesbank charges journal entrytds 281 challantally explanationsales quotationshow to fill a bank chequeundo recycle binfree download tally 9.0 softwaredebit and credit accounts examplesprepaid expenses examplesadjusting entries problems and solutionssuffix fyrules of debit and credit in journal entriestds tax paymentlist of indirect expenses in accountingbad debts written off journal entry