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salary and wages are considerd in tradung acount or in profit and loss account?
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?salary and wages are considerd in tradung acount or in profit and los...
Introduction: When it comes to accounting, it is important to know which accounts to use for specific transactions. One common question that arises is whether salaries and wages should be considered in trading account or profit and loss account.

Trading Account: The trading account is used to determine the gross profit or loss of a business. It includes all the direct expenses and revenues related to the production and sale of goods. Salaries and wages are not considered in the trading account because they are not directly related to the production or sale of goods.

Profit and Loss Account: The profit and loss account is used to determine the net profit or loss of a business. It includes all the indirect expenses and revenues related to the operation of a business. Salaries and wages are considered in the profit and loss account because they are indirect expenses incurred in running a business.

Conclusion: In conclusion, salaries and wages are considered in the profit and loss account because they are indirect expenses incurred in running a business. They are not considered in the trading account because they are not directly related to the production or sale of goods. It is important for businesses to understand the difference between the two accounts and properly allocate their expenses and revenues to ensure accurate financial reporting.
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?salary and wages are considerd in tradung acount or in profit and los...
Profit and loss account is considered in trading account because it is indirect expenses.
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