direct income vs indirect income with examples?
Answers
Answered by
96
Direct income is one which is earned directly by way of business activities.
Example: Salaried, Professionals
Indirect income is one which is earned by way of non-business activities. For example, sale of old newspapers, sale of carton boxes, etc.
Example: Sale of Fixed Asset
Coming to Expenses:
Direct as the word suggests are those expenses which are completely related or assigned to the core business operations. They are mainly related to purchases and production of goods/services. Direct expenses are a part of the prime cost or the cost of goods/services sold by a company.
Direct expenses can differ for different types of companies, such as manufacturing companies, construction companies, servicecompanies, etc.
Direct expenses are shown on the debit side of a trading account.
Examples
Wages, Factory rent, Material Cost, Premises Renting, Fuel, Freight, Carriage Inwards etc.
Indirect Expenses
Unlike direct, indirect expenses are not directly related or assigned to the core business operations. Indirect expenses are necessary to keep the business up and running, but they can’t be directly related to the cost of the core revenue generating goods or services.
Indirect expenses can be different for different types of companies such as manufacturing, construction, service companies etc.
Indirect expenses are shown on the debit side of an income statement.
Examples
Salaries, Telephone bills, Printing & Stationery, Legal & Accounting charges, Carriage Outwards etc.
Hence, i hope this will be helpful to guide to for the basics of your query.
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Thank you for being here..
Example: Salaried, Professionals
Indirect income is one which is earned by way of non-business activities. For example, sale of old newspapers, sale of carton boxes, etc.
Example: Sale of Fixed Asset
Coming to Expenses:
Direct as the word suggests are those expenses which are completely related or assigned to the core business operations. They are mainly related to purchases and production of goods/services. Direct expenses are a part of the prime cost or the cost of goods/services sold by a company.
Direct expenses can differ for different types of companies, such as manufacturing companies, construction companies, servicecompanies, etc.
Direct expenses are shown on the debit side of a trading account.
Examples
Wages, Factory rent, Material Cost, Premises Renting, Fuel, Freight, Carriage Inwards etc.
Indirect Expenses
Unlike direct, indirect expenses are not directly related or assigned to the core business operations. Indirect expenses are necessary to keep the business up and running, but they can’t be directly related to the cost of the core revenue generating goods or services.
Indirect expenses can be different for different types of companies such as manufacturing, construction, service companies etc.
Indirect expenses are shown on the debit side of an income statement.
Examples
Salaries, Telephone bills, Printing & Stationery, Legal & Accounting charges, Carriage Outwards etc.
Hence, i hope this will be helpful to guide to for the basics of your query.
If the content was useful to you make it helpful for others too, by Upvoting the answer please.
Thank you for being here..
Answered by
4
The direct and indirect income with the examples are described below:
Direct income:
- Direct income refers to capital that is earned directly from a company's operations.
- It is a primary and conjointly referred to as a full-of-life supply of financial gain.
- Some exemplars of direct financial gain are:
- Professionals
- A worker on a wage
- Profits from industrial entities
- Profits from product sales
Indirect income:
- Indirect revenue comes from non-commercial activity.
- It's a secondary supply of financial gain, or higher nonetheless, passive revenue. Indirect financial gain, on the opposite hand, features a means of saving a failing firm.
- Some exemplars of indirect financial gain are:
- Selling fastened resources or assets
- Selling of old articles and artifacts
- Income from merchandising books
- Income from the sale of scrap
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