Explain Direct expenses

Question

Explain Direct expenses. Also write its main illustrations?

Answer 1

Direct expenses are the portion of expenses categorization. In expenses categorization, we can split total expenses into direct and indirect. Direct expenses are associating to production and purchasing of goods. All expenses that are incurred for production or purchasing are termed as direct expenses. This is the part of prime cost or cost of goods sold of company's product. This shows the debit side of trading account. Following are its main illustration:

•    Freight
•    Carriage inward
•    Wages
•    factory expenses