Trading account is prepared on the basis of ________ expenses. (Fill in the blank by choosing correct option)
a) indirect
b) direct
c) revenue
d) other
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Trading account is prepared on the basis of direct expenses
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Trading account is prepared on the basis of ...direct .... expenses.
In the trading account, the cost of goods sold is subtracted from net sales for the period to calculate gross profit. Only direct revenue and direct expenses are considered in it. Trading account is prepared mainly to know the profitability of the goods bought by the businessman.
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