Question

Select the most appropriate alternative from those given below and rewrite the statement.

Trading account is prepared on the basis of __________________ expenses.
a) indirect
b) direct
c) revenue
d) other

Answer 1

Trading account is prepared on the basis of direct expenses.

Explanation: Trading Account records only direct expenses of the business that are incurred in purchasing goods, bringing them to godowns and manufacturing goods. So, they are directly connected with production and manufacturing of goods and services.