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In the context of the Trading Account, what are 'direct expenses'?
- a)Expenses that are directly related to administrative functions
- b)Expenses that are directly related to the selling of goods
- c)Expenses that are directly related to the purchase and preparation of goods for sale
- d)Expenses that are directly related to financial operations
Correct answer is option 'C'. Can you explain this answer?
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In the context of the Trading Account, what are 'direct expenses'?a)Ex...
Direct expenses in the context of the Trading Account are those expenses that are directly related to the purchase and preparation of goods for sale, such as freight and carriage on purchases.
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In the context of the Trading Account, what are 'direct expenses'?a)Ex...
Direct Expenses in Trading Account
In the context of the Trading Account, direct expenses refer to the expenses that are directly related to the purchase and preparation of goods for sale. These expenses are incurred during the production or acquisition of goods that are intended to be sold by a business. Direct expenses are deducted from the revenue earned from the sale of goods to calculate the gross profit or loss of a business.
Explanation of the Correct Answer: Option C
Expenses that are directly related to the purchase and preparation of goods for sale are considered direct expenses in the Trading Account. Let's further understand why this option is correct:
Direct Expenses
Direct expenses are those expenses that can be directly attributed to a particular product or service. They are incurred in the production or acquisition of goods that are intended to be sold. These expenses are directly related to the core operations of the business and are essential for the generation of revenue.
Examples of Direct Expenses
1. Cost of Goods Sold (COGS): This includes the cost of raw materials, direct labor, and direct overheads incurred in the production of goods for sale. These expenses are directly attributable to the goods produced.
2. Purchase of Goods: The cost of purchasing goods for resale is a direct expense as it is directly related to the procurement of goods for the purpose of sale.
3. Freight and Transportation Charges: Expenses incurred in transporting goods from the supplier to the business premises are considered direct expenses as they are directly related to the purchase and acquisition of goods.
4. Customs Duty: Customs duty paid on imported goods is a direct expense as it is directly related to the acquisition of goods for sale.
5. Direct Labor: The wages paid to workers directly involved in the manufacturing or preparation of goods for sale are considered direct expenses.
Conclusion
In conclusion, direct expenses in the Trading Account are those expenses that are directly related to the purchase and preparation of goods for sale. These expenses are essential for the production or acquisition of goods and are deducted from the revenue generated from the sale of goods to calculate the gross profit or loss of a business.
In the context of the Trading Account, direct expenses refer to the expenses that are directly related to the purchase and preparation of goods for sale. These expenses are incurred during the production or acquisition of goods that are intended to be sold by a business. Direct expenses are deducted from the revenue earned from the sale of goods to calculate the gross profit or loss of a business.
Explanation of the Correct Answer: Option C
Expenses that are directly related to the purchase and preparation of goods for sale are considered direct expenses in the Trading Account. Let's further understand why this option is correct:
Direct Expenses
Direct expenses are those expenses that can be directly attributed to a particular product or service. They are incurred in the production or acquisition of goods that are intended to be sold. These expenses are directly related to the core operations of the business and are essential for the generation of revenue.
Examples of Direct Expenses
1. Cost of Goods Sold (COGS): This includes the cost of raw materials, direct labor, and direct overheads incurred in the production of goods for sale. These expenses are directly attributable to the goods produced.
2. Purchase of Goods: The cost of purchasing goods for resale is a direct expense as it is directly related to the procurement of goods for the purpose of sale.
3. Freight and Transportation Charges: Expenses incurred in transporting goods from the supplier to the business premises are considered direct expenses as they are directly related to the purchase and acquisition of goods.
4. Customs Duty: Customs duty paid on imported goods is a direct expense as it is directly related to the acquisition of goods for sale.
5. Direct Labor: The wages paid to workers directly involved in the manufacturing or preparation of goods for sale are considered direct expenses.
Conclusion
In conclusion, direct expenses in the Trading Account are those expenses that are directly related to the purchase and preparation of goods for sale. These expenses are essential for the production or acquisition of goods and are deducted from the revenue generated from the sale of goods to calculate the gross profit or loss of a business.
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In the context of the Trading Account, what are 'direct expenses'?a)Expenses that are directly related to administrative functionsb)Expenses that are directly related to the selling of goodsc)Expenses that are directly related to the purchase and preparation of goods for saled)Expenses that are directly related to financial operationsCorrect answer is option 'C'. Can you explain this answer?
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In the context of the Trading Account, what are 'direct expenses'?a)Expenses that are directly related to administrative functionsb)Expenses that are directly related to the selling of goodsc)Expenses that are directly related to the purchase and preparation of goods for saled)Expenses that are directly related to financial operationsCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about In the context of the Trading Account, what are 'direct expenses'?a)Expenses that are directly related to administrative functionsb)Expenses that are directly related to the selling of goodsc)Expenses that are directly related to the purchase and preparation of goods for saled)Expenses that are directly related to financial operationsCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In the context of the Trading Account, what are 'direct expenses'?a)Expenses that are directly related to administrative functionsb)Expenses that are directly related to the selling of goodsc)Expenses that are directly related to the purchase and preparation of goods for saled)Expenses that are directly related to financial operationsCorrect answer is option 'C'. Can you explain this answer?.
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