Direct labor and salary outlays direct material purchases, which are classified asa)price disbursementsb)cash disbursementsc)budget disbursementsd)goods disbursementsCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

Disbursement is the act of paying out or disbursing money. Examples of disbursements include money paid out to run a business, cash expenditures, dividend payments, the amounts that a lawyer might have to pay out on a person's behalf in connection with a transaction, etc.

Answer

Cash outflow or payment of money to settle obligations such as operating expenses, interest payments for loans and accounts receivables during a particular period in order to carry out business activities is called as cash disbursement here direct labour direct material purchases involves direct cash outflow from the business hence they are considered as cash disbursement therefore option B is the correct answer

Answer

Direct Labor and Salary Outlays
Direct labor and salary outlays refer to the costs incurred by a company for the wages and salaries paid to its employees who are directly involved in the production process. These costs are considered as a part of the company's manufacturing overhead.

Direct Material Purchases
Direct material purchases, on the other hand, represent the costs incurred by a company for the purchase of materials that are directly used in the production process. These materials are considered as direct costs because they can be easily traced to a specific product or service.

Classification of Direct Material Purchases
Direct material purchases can be classified as cash disbursements. Cash disbursements refer to the outflow of cash from a company's bank account to pay for expenses or purchases. In the case of direct material purchases, the company pays cash to its suppliers to acquire the materials needed for production.

Explanation
Direct material purchases are classified as cash disbursements because they involve the payment of cash for the acquisition of materials. When a company purchases direct materials, it typically receives an invoice from the supplier, which specifies the amount due. The company then makes a payment using cash, check, or electronic transfer to settle the invoice.

Importance of Classifying Direct Material Purchases as Cash Disbursements
Classifying direct material purchases as cash disbursements is important for several reasons:

1. Cash Flow Management: By categorizing direct material purchases as cash disbursements, a company can accurately track and manage its cash flow. It allows the company to monitor its cash outflows related to the purchase of materials and plan its cash resources accordingly.

2. Financial Reporting: Classifying direct material purchases as cash disbursements is essential for accurate financial reporting. It ensures that the company's financial statements reflect the actual cash payments made for direct materials, providing transparency and reliability to stakeholders.

3. Budgeting and Planning: By identifying direct material purchases as cash disbursements, a company can incorporate these expenses into its budgeting and planning process. It helps in estimating the cash outflows associated with direct material purchases and aligning them with the company's overall financial goals.

In conclusion, direct material purchases are classified as cash disbursements because they involve the payment of cash for the acquisition of materials. This classification is important for cash flow management, financial reporting, and budgeting purposes.

Answer

B cash disbursements

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Any individual who purchases goods and services from the market for his consumption to satisfy his want is called as.

PURCHASE Book is used to record

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ABC&Co is a firm with 3 partners. Partner C takes care of purchase of goods on behalf of the firm. Partner C preferred a particular supplier as such supplier was paying him a commission on purchases made. Explain the liability of C. With respect to section 16​of Indian partnership act?

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ABC&Co is a firm with 3 partners. Partner C takes care of purchase of goods on behalf of the firm. Partner C preferred a particular supplier as such supplier was paying him a commission on purchases made. Explain the liability of C. With respect to section 16of Indian partnership act?