Question

Select the most appropriate alternative from those given below and rewrite the statement.
All indirect expenses are debited to ____________ account.

विकल्प

• Trading

• Capital

• Profit and Loss

• Current

Answer 1

All indirect expenses are debited to Profit and Loss account.

Indirect expenses are those which cannot be directly linked to the product of the business.
That is, For example, Salaries is an Indirect expense which will be charged to P&L A/C but Wages is a direct expense which will be charged to the trading A/C.
Salaries is paid to the employees who belong to the organization, as a whole. It can be salaries paid to employees who work in the marketing department or the accountancy department etc. point is, it cannot be directly associated to the product/ service/ good manufactured by the company.But, wages are paid to workers who are directly connected to the manufacturing aspect of the business, that is, who help in the production or manufacturing side and therefore their cost can be directly associated to the product manufactured.

In short, All indirect expenses (rent, salaries, freight outwards etc) are charged to the P&L A/C, and all direct expenses (wages, freight inwards) are charged to the Trading A/C.