This account reveals the net result of the business unit during on accounting period which is ultimately transferred to capital account. Gross profit/loss is revealed by the trading account is transferred to Profit and Loss Account. All expenses and losses not transferred to trading account are taken to the debit side or debited to Profit and Loss. These expenses are called as indirect expenses. The broad category of indirect expenses are as follows:
(1) Office and administrative expense: These include salaries, printing and stationary, office rent, legal charges, audit fees, telephone expenses,insurance premium, etc.
(2) Selling and Distribution expenses: These include salesman’s commission,advertisement expense, carriage outward, depreciation and repair expenses of vehicle use for sales, bad debts, etc.
(3) Financial charges: These include interest on loans, interest on public deposits, interest on bank overdraft, interest on capital, etc.
(4) Depreciation: Fixed assets are to be depreciated at fixed percentage in order to provide for wear and tear during usage
(5) Miscellaneous expenses: These include donations, charity loss by fire, theft, etc.
(1) Office and administrative expense: These include salaries, printing and stationary, office rent, legal charges, audit fees, telephone expenses,insurance premium, etc.
(2) Selling and Distribution expenses: These include salesman’s commission,advertisement expense, carriage outward, depreciation and repair expenses of vehicle use for sales, bad debts, etc.
(3) Financial charges: These include interest on loans, interest on public deposits, interest on bank overdraft, interest on capital, etc.
(4) Depreciation: Fixed assets are to be depreciated at fixed percentage in order to provide for wear and tear during usage
(5) Miscellaneous expenses: These include donations, charity loss by fire, theft, etc.
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