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Nancy Chawla

Where are trading expenses in final accounts?


1 Answer

  1. This answer was edited.

    I have answered this question on the assumption that “Trading Expenses are those expenses which are covered in the Trading Account”.

    Meaning of Trading Expenses

    Trading Expenses are direct expenses incurred for the purchase and production of goods. They are related to the core business operations of the business entity and directly related to the purchase and production of the finished goods.

    So, all the expenses incurred from the time of purchasing raw materials/goods till the time the finished goods are brought to a saleable condition are referred to as trading expenses.

    Eg. carriage inward, manufacturing expenses, wages, etc.

    Presentation in Financial Statements

    Particulars Financial Statement Treatment/Presentation
    Trading Expenses (Direct Expenses) Trading Account Presented on the Debit side of Trading Account

    A snippet of the Trading account has been attached for better understanding.

    Trading expenses in Trading account

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