Question

Differentiate between Direct Expenses and Indirect Expenses.

Answer 1

Basis	Direct Expenses	Indirect Expenses
Meaning	These Expenses are incurred before or during the production.	These expenses are incurred after production for sale of goods.
Disclosure	These Expenses are shown on debit side of Trading Account.	These Expenses are shown on debit side of Profit and Loss Account.
Purpose	These Expenses are subtracted from Sales to calculate Gross profit.	These Expenses are subtracted from Gross Profit to calculate Net profit.
Examples	Wages, Carriage Inwards, Fuel and Power.	Salaries, Carriage Outward, Rent.