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.
All expenses which are incurred in connection to sales. Examples: Advertisement, Commission to agent, Bad debts, Packing expenses, Showroom expenses, Salary to sales staff.
All expense in connection with distribution of goods. Examples: Carriage outward, Delivery van expenses, traveling expenses, salary of warehouse, watchman etc.
Financing expenses normally includes interest paid on loans, discount on bill discounted, discount allowed to debtors etc.
Miscellaneous expenses include interest on capital, depreciation of fixed assets, sundry expenses, general expenses etc.