Page 142 - Account 10

iii. Selling and Distribution Expenses
These are also indirect expenses. The expenses, which are incurred for the promotion
of sales and distribution of goods and services, are known as selling and distribution
expenses. These expenses are also debited in the profit and loss A/c. The following are
some examples of such expenses:
Packing expenses Warehouse rent/expenses
Godown rent/ insurance etc. Advertising expenses
Publicity expenses Carriage out
Freight out Showroom expenses
Sales agent’s salary and commission Traveller’s salary and commission
Export duty Bad debts Selling expenses
Distribution expenses Brokerage Sampling expenses

iv. Financial and other expenses
All the non-productive but indirect expenses other than the office and selling and
distribution expenses fall under this category. Discount, commission, interest, depreciation
etc. are of this type and also debited in profit & loss A/c.

Credit Side Items of Profit and Loss A/c

i. Gross profit
Gross profit is a credit balance of trading A/c i.e. the balancing figure on the debit
side and thus it is always credited in profit and loss A/c as “By Gross profit b/d”.

ii. Indirect income and profit
All the indirect incomes, gains and profits are mentioned on the credit side of profit
and loss A/c. Such incomes are:

Discount received Commission received
Rent from sublet Rent from tenants
Miscellaneous receipts Interest received from bank
Interest received from investment Dividend received
Income earned Profit on sale of old asset normal profit
Bad debt recovered Apprentice premium etc.

Specimen and Preparation of Profit and Loss A/c
Profit and Loss A/c of .................Co.
Dr. For the year ended ..................... Cr.
Particulars Amount Particulars Amount
To Gross loss b/d ............ By Gross profit b/d ............
To Salaries ............ By Discount received ............
To Salaries and wages ............ By Discount on purchase ............

142 Aakar’s Office Practice and Accountancy - 10 Final Accounts 143