The expenses which are recorded in the debit side of Profit and Loss Account may be classified under the following heads.
Office and administration expenses:
All expenses which are incurred in connection with office and administration. Examples: Salary of office staff, office rent, rates, taxes and insurance, office lighting and heating, postage and telegram, printing and stationery etc.
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Selling expenses:
All expenses which are incurred in connection to sales. Examples: Advertisement, Commission to agent, Bad debts, Packing expenses, Showroom expenses, Salary to sales staff.
Distribution expenses:
All expense in connection with distribution of goods. Examples: Carriage outward, Delivery van expenses, traveling expenses, salary of warehouse, watchman etc.
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Financing expenses:
Financing expenses normally includes interest paid on loans, discount on bill discounted, discount allowed to debtors etc.
Miscellaneous expenses:
Miscellaneous expenses include interest on capital, depreciation of fixed assets, sundry expenses, general expenses etc.