establishment of behalf and Loss account

Bad Credit Student Loan - establishment of behalf and Loss account

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Explanation of obvious items of profit and Loss Account

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Bad Credit Student Loan

1. Salaries

Salaries are paid for the services of employees and are debited to profit and loss ac- count being indirect expense. If any salary has been paid to proprietor or partners, it should be shown separately because it requires extra rehabilitation at the time of wage tax assessment.

2. Salaries and Wages

When wages catalogue is included with salaries it treated is as indirect charge and is taken into profit and loss account.

3. Rent

Rent of the office shop showroom or godown is an indirect charge and so is debited to profit & loss account. However, rent of factory is debited to trading account. When a part of the building has been sublet the rent received should be shown on the credit side of profit and loss catalogue as a separate item.

4. Rates and Taxes

These are levied by the local authorities to meet social expenditure. It being an indirect expenditure is shown on the debit side of profit and loss account.

5. Interest

Interest on loan, overdraft or overdue debts is payable by the firm. It is an indirect expense; so debited to profit and loss account. Interest on loan industrialized by the firm on depositor investments is an wage of the firm and so is credited to the profit and loss account.

If enterprise has paid any interest on capital to its proprietor or partners it should also be debited in the profit and loss catalogue but separately because this item needs extra rehabilitation at the time of income-tax assessment.

6. Commission

In enterprise sometimes agents are appointed to effect sales, who are paid commission as their remuneration. So this being a selling expenses is shown on the debit side of profit and loss account. Sometimes commission is also paid on purchases of goods, such 'as charge should be debited in the trading account. Sometimes the firm can also act as an agent to the other enterprise houses and in such cases it receives commission from them. Commission so received is shown on the credit side of profit and loss account.

7. Trade Expenses

They are also termed as 'sundry expenses'. Trade expenses report expenses of such a nature for which it is not worthwhile to open separate accounts. Trade expenses are not taken to trading account.

8. Repairs

Repairs to the plant, machinery, building are indirect expenses are treated charge and are debited to profit and loss account..

9. Traveling Expenses

Unless mentioned otherwise, traveling expenses are treated as indirect expenses and are debited to profit and loss account.

10. Horse & stable Expenses

Expenses incurred for the fodder of horses and wages paid for looking after stable are treated as indirect expenses and debited to profit and loss account.

11. Apprentice Premium

This is the whole expensed from persons to whom training is imparted by the business. It is an wage and is credited to profit and loss account. In case apprentice premium is expensed in expand for two or three years, then the whole is distributed over whole of years and each year's profit and loss catalogue is credited with its share of income.

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