Question

Rent, rates and taxes is an example of direct expenses.

• A. True
• B. False

Answer 1

The correct option is B False

Expenses are classified in to direct expenses and indirect expenses.

Expenses which are directly connected with the manufacturing or trading activity of the business are called direct expenses. Examples are direct material, direct wages, freight inward etc.

Expenses which are not directly connected with the manufacturing or trading activity are called as indirect expenses. These are essential expenses but does not have any direct connect with trading of the business. Examples are Rent, Rates & Taxes, Salaries.