why we do not record indirect expense in trading account?
Dear Student,
As per the guidelines issued by ICAI, we prepare a non-manufacturing firm prepares two accounts as a part of its financial statements:
1. Trading Account - to account for all direct expenses and incomes so that gross profit can be generated
2. Profit and Loss Account - to account for all indirect expenses and incomes to ascertain the net profit earned by the firm in a particular accounting period.
Hope this clarifies your doubt.
Keep posting!!
As per the guidelines issued by ICAI, we prepare a non-manufacturing firm prepares two accounts as a part of its financial statements:
1. Trading Account - to account for all direct expenses and incomes so that gross profit can be generated
2. Profit and Loss Account - to account for all indirect expenses and incomes to ascertain the net profit earned by the firm in a particular accounting period.
Hope this clarifies your doubt.
Keep posting!!